Wharton Corporation Pty Ltd T/A Action Alliance

[2013] FWC 2626

[2013] FWC 2626

FAIR WORK COMMISSION

STATEMENT

Fair Work Act 2009
s.185—Enterprise agreement

Wharton Corporation Pty Ltd T/A Action Alliance
(AG2013/923)

COMMISSIONER RYAN MELBOURNE, 30 APRIL 2013

Application for approval of the Action Alliance (Factory) Single-Enterprise Agreement 2013.

[1] An application for approval of the Action Alliance (Factory) Single Enterprise Agreement 2013 (the Agreement) was filed with FWC on 17 April 2013. The application was made by Wharton Corporation Pty Ltd and the Applicant’s representative was Baker Jones, Lawyers. The application identified that the Applicant as the employer did not appoint a bargaining representative and that there was no employee organisation nor any appointed employee bargaining representatives. The application was accompanied by a Form F17, a Statutory Declaration by Mr Craig Herman, Financial Controller for the Applicant.

[2] A significant number of issues arise in relation to this application.

Compliance with s.181(2)

[3] Section 181 provides as follows:

“181 Employers may request employees to approve a proposed enterprise agreement

(1) An employer that will be covered by a proposed enterprise agreement may request the employees employed at the time who will be covered by the agreement to approve the agreement by voting for it.

(2) The request must not be made until at least 21 days after the day on which the last notice under subsection 173(1) (which deals with giving notice of employee representational rights) in relation to the agreement is given.

(3) Without limiting subsection (1), the employer may request that the employees vote by ballot or by an electronic method.”

[4] The Statutory Declaration identifies that on 13 March 2013 the Applicant convened a meeting of employees who were at work and gave to those employees a Notice of Employee Representational Rights, a copy of the proposed Agreement and advised employees that a vote to approve the proposed Agreement would be conducted at 10.00am on 3 April 2013.

[5] Attached to the Statutory Declaration was a list of employees with an indication of which employees signed their acknowledgement of having received the Notice and the Agreement and which employees had the Notice and Agreement mailed to them. Of the 18 employees on this list one employee is identified as “Not Working”, 2 were identified as having the Notice and Agreement mailed to them and 15 signed the list.

[6] Two questions arise from the above in relation to compliance with s.181(2) of the Act.

[7] Firstly, has s.181(2) been complied with if the employer has requested employees to approve the Agreement at the same time that the employer issued the Notice of Employee Representational Rights. Whilst the vote for approval of the Agreement was held on 3 April the request to approve the Agreement was made on 13 March 2013.

[8] Secondly, where the employer mailed the Notice of Employee Representational Rights to 2 employees on 13 March 2013 receipt of the Notice of Employee Representational Rights would not have occurred earlier than 14 March 2013 and probably later than that date. In such circumstances (notwithstanding the first question) has the vote occurred at least 21 days after the day on which the last notice under subsection 173(1) in relation to the agreement is given.

Compliance with s.180(2)

[9] Section180(2) provides as follows:

“Employees must be given copy of the agreement etc.

(2) The employer must take all reasonable steps to ensure that:

(a) during the access period for the agreement, the employees (the relevant employees) employed at the time who will be covered by the agreement are given a copy of the following materials:

(i) the written text of the agreement;

(ii) any other material incorporated by reference in the agreement; or

(b) the relevant employees have access, throughout the access period for the agreement, to a copy of those materials.”

[10] The Statutory Declaration makes clear that all employees were provided with a copy of the proposed Agreement. It would appear that the Agreement incorporates some clauses from the Manufacturing and Associated Industries and Occupations Award 2010 (the Award). For example clauses 12.1 and 12.2 of the Agreement provide as follows:

“12.1 Any Additional Hours shall be paid in accordance with the Award dealing with overtime shall apply to this Agreement.

12.2 Any work performed on a Saturday, Sunday or Public Holiday shall be paid in accordance with the Award dealing with penalty rates shall apply to this Agreement.”

[11] The Agreement provides at clause 5 that employees are bound by any Employment Policies. It would appear that the Agreement incorporates the Employment Policies of the employer into the Agreement.

[12] It would appear that no reasonable steps were taken by the employer to give employees access to a copy of “any other material incorporated by reference in the agreement” which in this case included both part of the Award and Employment Policies.

Compliance with s.180(5)

[13] Section 180(5) provides as follows:

“Terms of the agreement must be explained to employees etc.

(5) The employer must take all reasonable steps to ensure that:

(a) the terms of the agreement, and the effect of those terms, are explained to the relevant employees; and

(b) the explanation is provided in an appropriate manner taking into account the particular circumstances and needs of the relevant employees.”

[14] The Form F17 specifically asks an employer the following question:

“2.7 Please specify the steps taken by the employer to explain the terms of the Agreement, and the effect of those terms, to relevant employees (s.180(5)):

[Note: Your answer must include information on the manner in which the explanation took account of particular circumstances and needs of the relevant employees. (e.g., where the employees were from a non-English speaking background, were young employees or did not have a bargaining representative).]”

[15] The answer given to this question by Mr Herman was: “n/a”

[16] Whilst Mr Herman might not think it appropriate to give employees an explanation of the terms and the effect of the terms of the Agreement it is a statutory obligation on the employer. As it stands it would appear that the Applicant has not complied with s.180(5) of the Act.

The Vote for the Agreement

[17] The Statutory Declaration is clearly wrong in at least one aspect. The Statutory Declaration shows that of the 17 employees only 15 voted yet there were 16 votes in favour of approving the Agreement.

Interaction with the NES - s.186(2)(c)

[18] The Form F17 asks two specific questions as follows:

“Interaction with National Employment Standards (s.186(2)(c))

2.10 Please list any terms of the Agreement that exclude in whole, or in part, the National Employment Standards:

2.11 Please identify any terms of the Agreement that are detrimental to an employee in any respect when compared to the National Employment Standards:”

[19] The Statutory Declaration of Mr Herman answered both questions with “n/a”. From comments I make in relation to the contents of the Agreement it would appear that these answers are wrong and that there are terms of the Agreement which are detrimental to an employee in some respect when compared to the NES.

Better Off Overall Test

[20] The Form F17 asks the following question:

“3.6 Does the Agreement contain any terms or conditions of employment that are less beneficial than equivalent terms and conditions in the reference instrument(s) listed in questions 3.1 and 3.2 or do those reference instrument(s) confer any entitlements that are not conferred by the Agreement?

[ ] Yes

[ ] No”

[21] The Statutory Declaration of Mr Herman answers this question by placing an X in the No brackets. From my following comments in relation to the content of the Agreement this answer is clearly false.

The Terms of the Agreement

Immediate Family and Leave Entitlements

[22] Clause 2.1(k) defines “Immediate Family” so as to exclude certain relationships which are included in the Fair Work Act. This leads to the situation that the Personal Carers Leave and Compassionate Leave clauses of the Agreement operate to provide a lesser entitlement than the NES.

Part time Employment

[23] Clauses 2.1(p), 4.3, 4.4 and 4.5 in combination operate to define part time employment. When compared to the provisions of clause 13 of the Award the Agreement provides for a concept of part time employment which lacks some of the benefits of the Award. It would appear that an employee employed as a part time employee under the Agreement would not be better off overall if employed under the Agreement notwithstanding a higher wage rate in the Agreement.

[24] The combined operation of the definition of Part time Employee in clause 2.1(p) and clause 4.5 has the effect that an employee who works less than 38 hours a week and who has reasonably predictable hours of work will be paid as a Casual if the employer simply does not provide such an employee with pro rata entitlements that would otherwise be paid to a part time employee under the Award. Thus an employee who would be a part time employee under the Award could be treated and paid as a casual employee under this Agreement. This raises a significant issue as to whether such a provision would pass the BOOT.

Serious Misconduct

[25] The Agreement includes at clause 2.1(v) an inclusionary definition of “Serious Misconduct” which includes the following conduct: “failure to follow any Employment Policies”. Not only does this inclusion extend the concept of serious misconduct beyond that contained in Regulation 1.07 but it does so in a way which would capture conduct that on any objective test would not be serious misconduct. This is so because a failure to follow an Employment Policy may amount to either simple misconduct or serious misconduct depending both upon the contents of the Employment Policy and the nature of the failure.

[26] The broadened definition of Serious Misconduct in this Agreement would appear to operate to remove an employee’s NES entitlement to notice on termination in circumstances where the employee would have entitlement re notice but for this Agreement.

Commencement Date, Term and Operation

[27] Clause 3.1 of the Agreement provides that the Agreement will “commence on the day that it is approved by FWA in accordance with the Act”. This however cannot be the case as S.54(1) of the Act makes very clear that an enterprise agreement cannot commence operation any earlier than 7 days after the agreement is approved.

[28] Clause 3.3 of the Agreement makes clear that the Agreement supersedes the operation of the Award. This provision is strictly not necessary in an Agreement given that s.57 of the Act provides that an award does not apply to employees or their employer whilst an enterprise agreement applies to the employee in relation to work which is covered by the agreement.

[29] The effect of either clause 3.3 of the Agreement or s.57 of the Act is that terms of the Award which are not reflected in terms of the Agreement or are not incorporated into the Agreement simply do not apply to the employees. The absence in the Agreement of some clauses of the Award may have a direct impact on the balancing to be done in the application of the BOOT.

[30] In the present matter the following relevant clauses of the Award are not reflected in the Agreement and their absence needs to be considered in the application of the BOOT:

15. Apprentices, 16. School based Apprentices, 18. Trainees, 21. Abandonment of Employment, 23. Redundancy, 30 Supported Wage system, 34. Payment of Wages and 35. Superannuation.

Employment Policies

[31] Clause 5 of the Agreement is in the following terms:

“5. Employment Policies

5.1 Employees agree to be bound by any Employment Policies and acknowledge that the Employer may vary, change or terminate existing Employment Policies as well as devise and introduce new policies.

5.2 The Employer shall take all reasonable steps to ensure that Employees are aware of all Employment Policies and Employees shall make all reasonable efforts to ensure they are aware of all Employment Policies.

5.3 Employees accept personal responsibility and liability for any actions outside of Employment Policies.

5.4 Should any of the Employment Policies in any way conflict with this Agreement then this Agreement shall take precedence.”

[32] There is no similar clause in the Award.

[33] A number of separate issues arise in relation to the operation of clause 5.

[34] Firstly, clause 5 uses the vehicle of an enterprise agreement to bind the employees to compliance with the employer’s employment policies. This means that non compliance with an employment policy would also constitute non compliance with a term of an enterprise agreement. Section 50 of the Act provides as follows:

“50 Contravening an enterprise agreement

A person must not contravene a term of an enterprise agreement.

Note 1: This section is a civil remedy provision (see Part 4-1).

Note 2: A person does not contravene a term of an enterprise agreement unless the agreement applies to the person: see subsection 51(1).”

[35] The Agreement has therefore made non compliance with an employment policy a breach of s.50 and employee who does not comply with an employment policy can be subject to a Court proceeding for a civil remedy.

[36] Secondly, the fact that the employer reserves to itself the right to “vary, change or terminate existing Employment Policies as well as devise and introduce new policies” means that the Commission could never be satisfied that the BOOT has been passed as the full impact of the operation of clause 5 cannot be known.

[37] Thirdly, clause 5.3 uses the enterprise agreement to make employees legally liable for any of their actions which are outside the employment policies. This would appear to create a legal burden on an employee which would not exist under the Award.

[38] Fourthly, as none of the existing Employment Policies were made available to employees at the commencement of the access period and as none of the existing Employment Policies are attached to the Agreement there are real issues as to whether employees genuinely agreed to the Agreement.

Ordinary Rates of Pay

[39] Clause 7.1 of the Agreement contains a table which identifies the rates of pay to be paid to employees covered by this Agreement. Those rates are in excess of the rate of pay identified in clause 24.1 of the Award as the Adult employee minimum wages.

Classification	Type of employment	Agreement ordinary hourly rate	Award ordinary hourly rate	Agreement better than the Award by:
C14	Full time or Part time	16.59	15.96	.63
Casual	20.74	19.95	.79
C13	Full time or Part time	17.16	16.42	.74
Casual	21.45	20.53	.92
C12	Full time or Part time	17.79	17.05	.74
Casual	22.24	21.31	.93

[40] Whilst the Agreement rates are better than the Award rates this does not mean that an employee will necessarily be better off if employed under the Agreement as against being employed under the Award.

[41] Clause 7.3 of the Agreement provides as follows:

“7.3 Ordinary Hourly Rates are inclusive of all applicable incentive payments and bonuses and monetary allowances unless otherwise expressly provided for in this Agreement.”

[42] The Agreement does not contain any of the allowances found in clause 32 - Allowances and Special Rates of the Award. Given that the employer through the Statutory Declaration of Mr Craig Herman describes the primary activity of the employer as being “Industrial protective coatings and painter” it would appear that several of the allowances and special rates in clause 32 of the Award may have application to employees employed under the terms of the Agreement. Some of the possibly applicable allowances and special rates are clearly cumulative and it would appear that where an employee was entitled to allowances and special rates in accordance with clause 32 of the Award then the Agreement rate, both hourly and weekly, may not be equal to the amount that the employee would be paid under the Award. On the information currently before I could not be satisfied that the rates of pay pass the BOOT.

Performance Review

[43] Clause 8 of the Agreement provides as follows:

“8. Performance Review

8.1 The employment of all Employees shall be subject to annual review and from time to time at the absolute discretion of the Employer.

8.2 For the avoidance of doubt the Employer shall not be obliged to increase Ordinary Hourly Rates following any annual review.”

[44] The wording of clause 8.1 appears to reserve to the employer the right to terminate employees as part of an annual review. Whilst this clause may strictly be legal it raises the issue as to whether employees will be better off overall if employed under the terms of this Agreement rather than under the Award.

Probation

[45] Clause 10 of the Agreement provides as follows:

“10. Probation

10.1 On engagement Employees shall be subject to a period of probation of:

(a) three (3) months or less; or

(b) more than three (3) months provided such period is reasonable having regard to the nature and circumstances of the employment.

10.2 The Employer reserves the right to terminate the employment of an Employee during the probationary period by the giving of one (1) day’s notice.”

[46] Three specific issues arise in relation to this clause.

[47] Firstly, there is no probationary period of employment under the Award and the very presence of this clause in the Agreement raises the issue of the BOOT.

[48] Secondly, if a probationary period in clause 10(1)(a) is consistent with the Agreement passing the BOOT does the Agreement pass the BOOT where as in clause 10(1)(b) the employer can unilaterally extend the period of probation without any upper limit. This is particularly given the fact that the Agreement covers non trades employees at the lowest Award levels of C14 to C11. It would be difficult to envisage when a three month probationary period was inadequate for employees at those levels.

[49] Thirdly, clause 10.2 seeks to replace the minimum notice period specified in s.117 of the Act with a much lesser entitlement. Whilst it is clear that such a clause in an enterprise agreement cannot reduce a statutory entitlement the clause would clearly misrepresent to workers their legal entitlement. This raises real issues as to whether employees have genuinely agreed to approve the Agreement.

Hours of Work

[50] Clause 11.1 provides as follows:

“11 .1 Ordinary hours of work for a Full Time Employee shall not exceed thirty-eight (38) hours per week on average over a fifty-two (52) week period.”

[51] Whilst s.63(1) of the Act permits averaging of hours in awards and enterprise agreements the fact that the averaging permitted by clause 36(2) of the Award is limited to a maximum of 152 hours in 28 days raises the issue of whether a Full time or Part time employee would be better off overall if employed under the terms of the Agreement than if employed under the terms of the Award.

[52] The wording of clause 11.1 would appear to deliberately exclude casual employees from the averaging of hours worked.

[53] Clauses 11.2 and 11.4 of the Agreement provide as follows:

“11.2 Subject to the other provisions of this Agreement ordinary hours of work may be from Monday to Sunday inclusive of Public Holidays subject to the following restrictions:

(a) maximum ordinary hours worked on any day shall not exceed eleven (11) hours;

(b) Employees shall not be required to work more than ten (10) consecutive days without four (4) days off;

(c) Employees shall have at least ten (10) hours between each shift; and

(d) Employees are entitled to a minimum four (4) hour engagement.

11.4 Ordinary hours of work for Full Time Employees shall be between 5:00am and 7:00pm Monday to Friday.”

[54] The structure of these two clauses means that whilst Full time and Part time employees have a specific span of ordinary hours Monday to Friday the same does not apply to Casual employees whose ordinary hours would be any of the 24 hours in a day. Further whilst clause 11.4 provides protections for Full time and Part time employees between Monday and Friday no such protection is given for Saturday and Sunday.

[55] It is clear that clauses 11.1 and 11.4 would permit every employee to be required to work 10 consecutive days of 11 hours per day commencing at 5.00am and ending at 4.30pm (this includes the ½ hour unpaid meal break specified in clause 13.2(a)). After having worked these 110 ordinary hours an employee would be entitled to 4 days off.

[56] However the operation of clause 11.2 would also permit the employer to require employees to work 9 consecutive days each of 11 hours and then only have 1 day off work before working another 9 day consecutive days of 11 hours with only 1 day off. Whilst even more extreme examples are possible under the terms of the Agreement even two cycles of this pattern would appear to create substantial difficulties in passing the BOOT.

[57] The operation of clause 11 of the Agreement would be subject to s.63(2) of the Act which provides that the terms of an enterprise agreement may provide for average weekly hours that exceed 38 if the excess hours are reasonable. It would appear that many of the possible scenarios permitted by the plain language of clause 11 would create a requirement to work excess hours that may not be reasonable.

[58] Clause 11.3 deals with reasonable additional hours as follows:

“11.3 In addition to the ordinary hours of work Employees also agree to work reasonable Additional Hours at the request of the Employer. In determining what are reasonable Additional Hours the parties may take into account the following:

(a) any risk to any Employee’s health and safety;

(b) an Employee’s personal circumstances (including family responsibilities);

(c) the operational requirements of the Employer’s workplace;

(d) any notice given by the Employer of the requirement to work Additional Hours;

(e) any notice given by an Employee of the intention to refuse to work Additional Hours;

(f) whether any of the Additional Hours are on a Public Holiday; and

(g) an Employee’s hours of work over the four (4) week period ending immediately before the Employee is required or requested to work the Additional Hours.”

[59] Clause 11.3 appears to address the same subject as is dealt with in s.62(3) in determining what are reasonable additional hours on days other than public holidays and s.114(4) in determining what are reasonable additional hours worked on a public holiday.

[60] By not replicating the provisions of s.62(2) and s.114(4) clause 11.3 provides a lesser entitlement to employees than is provided by the Act. Whilst it is clear that such a clause in an enterprise agreement cannot reduce a statutory entitlement the clause would clearly misrepresent to workers their legal entitlement. This raises real issues as to whether employees have genuinely agreed to approve the Agreement.

[61] It is also relevant to note that for BOOT purposes the Agreement provides that the span of ordinary hours for full time and part time employees has been increased by 2 hours per day Monday to Friday and that ordinary hours for casuals includes all 168 hours in a week.

Penalty Rates and Overtime

[62] The Agreement makes clear at clause 11.5 that all hours worked by any employee outside the hours of 5.00am to 7.00pm Monday to Friday whether they be ordinary hours or overtime hours will be paid at the overtime rate. However the issue of concern relates to what is the overtime rate. Clauses 12.1 and 12.2 provide as follows:

“12.1 Any Additional Hours shall be paid in accordance with the Award dealing with overtime shall apply to this Agreement.

12.2 Any work performed on a Saturday, Sunday or Public Holiday shall be paid in accordance with the Award dealing with penalty rates shall apply to this Agreement.”

[63] The language of the two provisions is poorly written but it would appear that the essence of each provision is to apply the Award to overtime and to work on Saturday, Sunday or a Public Holiday. There is nothing in either provision to suggest that the Award provisions are to be applied to the ordinary rates of pay set out in clause 7 of the Agreement. Rather the very absence of such a clear statement means that each of clauses 12.1 and 12.2 are meant to apply the Award entitlement to overtime rates and weekend and public holiday penalties on the basis of applying such loadings and penalties to the Award rate of pay. This means that for employees employed under this Agreement work performed as overtime or work performed on Saturday, Sunday or a Public holiday they are in the same position in relation to such work as if they were employed under the Award. There is nothing wrong with either provision: it is simply that these provisions are neutral for the purpose of applying the BOOT.

Rest Breaks (including meal breaks)

[64] Clause 13 of the Agreement provides as follows:

“13. Rest Breaks (including meal breaks)

13.1 Allowances that deal with rest and meal breaks shall apply to this Agreement.

13.2 For the avoidance of doubt Employees shall be entitled to:

(a) one unpaid half-hour meal break and one paid 15 minute rest break during each whole day worked to be taken at a time convenient to the Employer; or

(b) one unpaid half-hour meal break not earlier than four (4) hours after commencing a shift and one paid 15 minute break to be taken at a time convenient to the Employer in the event that the Employee works less than a whole day.”

[65] The corresponding clause of the Award is as follows:

“38. Meal breaks

38.1 An employee must not be required to work for more than five hours without a break for a meal except in the following circumstances:

(a) in cases where canteen or other facilities are limited to the extent that meal breaks must be staggered and as a result it is not practicable for all employees to take a meal break within five hours, an employee must not be required to work for more than six hours without a break for a meal break; or

(b) by agreement between an employer and an individual employee or the majority of employees in an enterprise or part of an enterprise concerned, an employee or employees may be required to work in excess of five hours but not more than six hours at the ordinary time rate without a meal break.

38.2 The time of taking a scheduled meal break or rest break by one or more employees may be altered by an employer if it is necessary to do so in order to meet a requirement for continuity of operations.

38.3 An employer may stagger the time of taking meal and rest breaks to meet operational requirements.

38.4 Subject to clause 38.1, an employee must work during meal breaks at the ordinary time rate whenever instructed to do so for the purpose of making good any breakdown of plant or for routine maintenance of plant which can only be done while

the plant is idle.

38.5 Except as otherwise provided in clause 38 - Meal Breaks and except where any alternative arrangement is entered into by agreement between the employer and the employee concerned, time and a half rates must be paid for all work done during meal hours and thereafter until a meal break is taken.

38.6 Employees engaged in the technical field of work, technical workers, tracers and draughtspersons, production planners, trainee engineers and trainee scientists must be allowed a paid 10 minute morning tea rest period at a time fixed by the employer.”

[66] Employees employed under this Agreement are better off than if employed under the Award insofar as the Agreement provides a 15 minute paid rest break. However, employees are disadvantaged under the Agreement in relation to meal breaks. This is so because under the Agreement an employee is entitled to one, and only one, half hour meal break a day even where the day is 11 hours. Under the Award an employee would normally be entitled to 2 half hour meal breaks in an 11 hour day. Whilst there is no financial loss to the employee as under both the Agreement and the Award the meal breaks are unpaid there is a loss of real value to an employee in not being able to access, as of right, a second meal break in an 11 hour day under the Agreement.

[67] A second issue arising from clause 13.1 is that the clause does not identify where the allowances, which are to apply to the Agreement, are to be found. The language of clause 13.1 is so poor that effectively it provides no entitlement to any employee. To the extent that there are meal allowances in the Award such allowances are not in the Agreement and this disadvantage to employees must be taken into account in applying the BOOT.

Confidentiality and Non-Disclosure

[68] Clause 14 is a comprehensive provision dealing with confidential information and non-disclosure of confidential information. Confidential information is defined at clause 2.1(g). The two provisions are as follows:

“14. Confidentiality and Non-Disclosure

14.1 Subject to sub-clause 14.2 below Employees agree to keep all Confidential Information confidential.

14.2 Notwithstanding sub-clause 14.1 above Employees shall not be bound to keep confidential any information which:

(a) the Employee can show was already in the Employee’s possession at the date of this Agreement or the date that employment commenced (whichever date is the earlier);

(b) the Employee is required to disclose in the proper performance of the Employee’s duties;

(c) the Employee is required to disclose by a Court, tribunal or law; and/or

(d) is in or becomes part of the public domain other than by an act by or on behalf of the Employee in breach of this Agreement.

14.3 Employees must take whatever measures are reasonably necessary to preserve all Confidential Information including:

(a) complying with all security measures established to safeguard Confidential Information from access or unauthorised use;

(b) keeping Confidential Information under the Employee’s control; and

(c) not removing Confidential Information from or accessing Confidential Information from outside the Employer’s premises without the prior approval of the Employer.”

“Clause 2.1(g) “Confidential Information” means all information passing from the Employer to an Employee and/or acquired by an Employee in the course of an Employee’s employment including but not limited to the business and/or affairs of the Employer, marketing and financial information (such as customer lists or details), business plans, records, documents, procedures, products, training methods, accounts, details, reports, opinions and/or any other document and/or any information relating to trade secrets, processes, equipment and techniques used by the Employer;”

[69] Neither provision provides any benefit to an employee employed under the terms of the Agreement. The purpose of the clause is to provide a benefit to the employer and to place a burden on employees.

[70] The Award does not contain a similar provision. Therefore on its face the Agreement provisions weigh against the BOOT being passed.

[71] The burden placed on employees by the combined operation of clause 2.1(g) and clause 14 is considerable.

[72] An employee who used confidential information such as time and wage records to pursue a workplace right would be acting in breach of clause 14. This means that the employee would also have breached s.50 of the Act and could be subject to court action for a civil remedy. Whilst confidentiality clauses are often a feature of employment contracts their presence in enterprise agreements is odd given that they have no value to employees and the more burdensome they are the more they will weigh against the Agreement passing the BOOT.

[73] The second issue arising in relation to clause 14 is whether it is an objectionable term for the purposes of s.194(b) of the Act. Clause 14 appears to permit a contravention of Part 3-1 of the Act in that it creates a right for the employer to take adverse action against an employee who uses confidential information to pursue a workplace right.

Leave

[74] Both clauses 16 and 17 of the Agreement express the entitlement to leave on the basis of “Nominal Hours Worked” by the employee. In turn “Nominal Hours Worked” is defined in clause 2.1(n) of the Agreement as having the same meaning as set out in the Fair Work Act. However the term ‘Nominal Hours Worked” is not a term defined by the Fair Work Act.

[75] The consequence of this is that the entitlement to leave in the Agreement is based on a meaningless concept. Whilst this cannot operate to lessen an employees right to leave in accordance with the NES the very language of the Agreement would confuse any employee as to what their entitlement is.

[76] Clause 16.4(b) of the Agreement provides that the employer may direct an employee to take annual leave “if an employee has a large accumulated annual leave balance”. S.93(3) of the Act permits an enterprise agreement to contain a term “allowing for an employee to be required to take paid annual leave in particular circumstances but only if the requirement is reasonable”.

[77] Clause 16.4 of the Agreement contains none of the qualifications on the employers ability to direct an employee to take annual leave as a re found in clause 41.6 of the Award. This raises two issues. Firstly, as clause 16.4 of the Agreement provides a lesser benefit to employees than does clause 41.6 of the Award this would weigh against the Agreement passing the BOOT. Secondly, the very fact that clause 16.4 of the Agreements lacks any of the protections in clause 41.6 of the Award suggests that clause 14.6 may not meet the “reasonable requirements” test in s.93(3) of the Act.

Public Holidays

[78] There appears to be a conflict between the provisions of clauses 20.2 and 12.2 of the Agreement. The two provisions are as follows:

12.2 Any work performed on a Saturday, Sunday or Public Holiday shall be paid in accordance with the Award dealing with penalty rates shall apply to this Agreement.

and

20.2 If an Employee works on a Public Holiday then that Employee:

(a) if a Full Time Employee or a Part Time Employee shall be paid the Ordinary Hourly Rate and shall be entitled to a day off in lieu of the Public Holiday worked; or

(b) if a Casual Employee shall subject to sub-clause 7.4 above be paid the Ordinary Hourly Rate.

[79] As has been discussed earlier clause 12.2 is neutral for BOOT purposes. However it would appear that clause 20.2 may be less beneficial for employees than the provisions of the Award.

[80] How does any employee know what they will receive if they work on a public holiday?

[81] If the intention of the Agreement is that clause 20.2 provides the entitlements for work performed on a public holiday then there are concerns in relation to the BOOT.

[82] Clause 40.9(a) of the Award is in the following terms:

“40.9 Public holiday work

(a) A day worker required to work overtime on a public holiday must be paid for a minimum of three hours work at the rate of double time and a half. The double time and a half is to be paid until the employee is relieved from duty.”

[83] For casual employees the Agreement pays a much lower rate than the Award for work on a public holiday. The Agreement provides that a casual employee will be paid 125% of the Agreement rate of pay whereas the Award provides for payment of double time and a half of the Award rate of pay.

[84] Full time and Part time employees have an entitlement under the Agreement which has the value of double time the Agreement rate. However as the Agreement does not give the employee any choice in the method of remuneration the benefit given by the Agreement may not be as beneficial as being paid the Award provision of double time and half of the Award rate for work on a Public Holiday.

Termination

[85] Clause 22.6 of the Agreement requires the employee to give to the employer the same notice of termination that the employer is required to give to the employee. This is less beneficial to an employee than the provisions of the Award.

[86] Clause 22.2 of the Award is as follows:

“22.2 Notice of termination by an employee

The notice of termination required to be given by an employee is the same as that required of an employer except that there is no requirement on the employee to give additional notice based on the age of the employee concerned. If an employee fails to give the required notice the employer may withhold from any monies due to the employee on termination under this award or the NES, an amount not exceeding the amount the employee would have been paid under this award in respect of the period of notice required by this clause less any period of notice actually given by the employee.”

[87] The Award specifically exempts the employee from having to give the same notice of termination as the employer is required to give where the employee has the benefit of an extra week of notice where the employee is over 45 and has at least 2 years continuous service. The Agreement requires an employee who is over 45 and has at least 2 years continuous service to give more notice of termination than the employee would be required to give if employed under the Award. This is clearly has relevance to the application of the BOOT.

Consultation

[88] Clause 25 of the Agreement is a consultation clause which was identified in the Statutory Declaration of Mr Craig Herman as being the term of the Agreement required by s.205(1) of the Act.

[89] An examination of the content of clause 25 indicates that it does not meet the requirements of s.205 of the Act.

[90] Section 205 is as follows:

“205 Enterprise agreements to include a consultation term etc.

Consultation term must be included in an enterprise agreement

(1) An enterprise agreement must include a term (a consultation term) that:

(a) requires the employer or employers to which the agreement applies to consult the employees to whom the agreement applies about major workplace changes that are likely to have a significant effect on the employees; and

(b) allows for the representation of those employees for the purposes of that consultation.

Model consultation term

(2) If an enterprise agreement does not include a consultation term, the model consultation term is taken to be a term of the agreement.

(3) The regulations must prescribe the model consultation term for enterprise agreements.”

[91] The “model consultation term” set out in Schedule 2.3 to the Fair Work Regulations and is as follows:

“Model consultation term

(1) This term applies if:

(a) the employer has made a definite decision to introduce a major change to production, program, organisation, structure, or technology in relation to its enterprise; and

(b) the change is likely to have a significant effect on employees of the enterprise.

(2) The employer must notify the relevant employees of the decision to introduce the major change.

(3) The relevant employees may appoint a representative for the purposes of the procedures in this term.

(4) If:

(a) a relevant employee appoints, or relevant employees appoint, a representative for the purposes of consultation; and

(b) the employee or employees advise the employer of the identity of the representative;

the employer must recognise the representative.

(5) As soon as practicable after making its decision, the employer must:

(a) discuss with the relevant employees:

(i) the introduction of the change; and

(ii) the effect the change is likely to have on the employees; and

(iii) measures the employer is taking to avert or mitigate the adverse effect of the change on the employees; and

(b) for the purposes of the discussion — provide, in writing, to the relevant employees:

(i) all relevant information about the change including the nature of the change proposed; and

(ii) information about the expected effects of the change on the employees; and

(iii) any other matters likely to affect the employees.

(6) However, the employer is not required to disclose confidential or commercially sensitive information to the relevant employees.

(7) The employer must give prompt and genuine consideration to matters raised about the major change by the relevant employees.

(8) If a term in the enterprise agreement provides for a major change to production, program, organisation, structure or technology in relation to the enterprise of the employer, the requirements set out in subclauses (2), (3) and (5) are taken not to apply.

(9) In this term, a major changeis likely to have a significant effect on employees if it results in:

(a) the termination of the employment of employees; or

(b) major change to the composition, operation or size of the employer’s workforce or to the skills required of employees; or

(c) the elimination or diminution of job opportunities (including opportunities for promotion or tenure); or

(d) the alteration of hours of work; or

(e) the need to retrain employees; or

(f) the need to relocate employees to another workplace; or

(g) the restructuring of jobs.

(10) In this term, relevant employees means the employees who may be affected by the major change.”

[92] The model consultation term cannot be used to define the operation of s.205(1) but it does provide a simple means of comparison with clause 25 of the Agreement to assist in identifying whether clause 25 meets the requirements of s.205(1) of the Act.

[93] The most obvious deficiency in clause 25 of the Agreement is that it does not meet the requirement in s.205(1)(b) of the Act. Whereas the model consultation term explicitly provides at paragraph 3 for the employee to be represented there is no such equivalent provision in clause 25 of the Agreement.

[94] The second deficiency in clause 25 of the Agreement is that it defines “significant effects” by limiting the concept of “significant effects” to three specific matters. By way of comparison between clause 25 of the Agreement and the model consultation term clause 25 of the Agreement does not include in the definition of “significant effects” the matters enumerated in paragraphs 9(d) to (g) inclusive of the model consultation term.

[95] The Act does not define the term “significant effect on the employees” that is central to the operation of s.205(1) of the Act. However that term is not without a well understood industrial meaning. In the TCR Test case in 1984 the Full Bench of the then Australian Conciliation and Arbitration Commission in setting the wording of the Introduction of Change clause to be inserted into awards defined “significant effects” as follows:

“‘Significant effects’ include termination of employment; major changes in the composition, operation or size of the employer’s workforce or in the skills required; the elimination or diminution of job opportunities, promotional opportunities or job tenure; the alteration of hours of work; the need for retraining or transfer of employees to other work or locations; and the restructuring of jobs.”

[96] As can be seen the model consultation term closely follows the 1984 TCR decision and clause 25 of the Agreement contains a significantly reduced definition of ‘significant effects’. It appears to me that clause 25 does not meet the requirements of s.205(1) of the Act.

Further Consideration of Application

[97] The Applicant is given until close of business on 15 May 2013 to file any additional material it wishes me to consider and to offer any undertakings to address any of the concerns raised in this statement.

[98] I direct the Applicant to give a copy of this statement to each of the employees who will be covered by this Agreement. Those employees are entitled to file with the Commission any submissions or any material either in support of the application or opposing the application.

[99] Material can be filed by either the applicant or any employee by email addressed to [email protected]

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