AG2010/18507, Transcript of Proceedings [2010] FWATrans 1864 (22 December 2010)

TRANSCRIPT OF PROCEEDINGS

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Fair Work Act 2009 33657-1

COMMISSIONER GOOLEY

AG2010/18507

s.185 - Application for approval of a single-enterprise agreement

Application by Barwon Coast Committee of Management Inc

(AG2010/18507)





Melbourne

9.38 AM, FRIDAY, 3 DECEMBER 2010

PN1

THE COMMISSIONER: Thank you, I'll take the appearances.

PN2

MR R. JORDAN: Good morning, I'm the general manager of Barwon Coast and I appear on their behalf.

PN3

THE COMMISSIONER: Thank you. I called this matter on because I thought it would probably be easier than a continual exchange of emails between us. I initially wrote on 16 November outlining a number of issues that I had in relation to the agreement and I received a response from you on the same day and maybe if we just go through those issues that I have raised. In response to the issue I have raised about annualised salaries. Your response to that was that you thought the individual flexibility clause would allow an individual the capacity not to agree to an annualised salary. Of course that's not the case because an individual flexibility agreement actually has to be agreed between the employer and the employee. It's not something an employee has a unilateral right to and therefore there is no mechanism in this agreement whereby the employee has a choice of being on an annualised salary or not.

PN4

My concerns about the issue of annualised salaries is that they are built on certain assumptions about how often somebody might work on a Saturday and how often somebody might work on a Sunday or how often they might work on a public holiday. My concern is that if those assumptions aren't actually included in the agreement the employee could for example work every Sunday or every Saturday and there's nothing in the agreement that prevents that from occurring. That's why I referred you to the modern award provision which has effectively a safety net. It says that the modern award safety net provides that if you're on an annualised salary it's never allowed for below the award entitlements. So I just wonder what your response to that is."

PN5

MR JORDAN: The response would be that a) I clearly didn't understand the requirements precisely, and from the general discussion from what our employees and my knowledge and their knowledge of their work habits over the past 10 years would be that their level of weekend work is so minimal in relevant terms that the 25 per cent loading far exceeds what they would work in relation to Saturdays and Sundays. This was a key part of our presentation to the staff, all our employees when we were developing up the agreement, but I understand if you're saying that there is an extra clause we need to add into the agreement that requires that protection then we'll clearly so do.

PN6

THE COMMISSIONER: Very well, thank you. The other issue is the issue about - and I accept your response in relation to that's what the modern award says in the hospitality award. But what the modern award goes on to do when it talks about an average of 38 hours is the modern award then goes on to say in the hours of work clause how that might be averaged. So the modern award which says the hours of work for a full time employee are an average of 38 per week. But they can only be worked either in a 19 day fortnight, four days of eight hours and one day of six hours. There's a whole - or the 152 hours over a four week period. So the modern award itself, while it has those words about an average of 38 hours per week, the most you can average them over is a month and I'm not sure how that works in relation to your arrangements because it appears what you're saying is that the Christmas period is a particularly busy period, but would people be rostered to work their 152 hours over more than a month? Would they - - -

PN7

MR JORDAN: No, the average employee would work say a 19 day four week and that still applies over peak summer, so they are always working a 19 day four week but in peak summer that may include a Saturday and Sunday, whereas in normal times it wouldn’t.

PN8

THE COMMISSIONER: If the 38 hours is averaged over a four week period you would have flexibility to work a 19 day fortnight or whatever - however you want the arrangement, but it at least puts in that four week averaging.

PN9

MR JORDAN: Yes.

PN10

THE COMMISSIONER: The other issue was the issue of the part timers, the issue about - under the hospitality award about part timers having to have agreed hours and you response is that you thought it would be better to classify them as part timers. What the part time clause provides in the modern award is this. There has got to be an agreement at the commencement of employment about days of the week and hours. That can be varied by agreement. So for example you could have a casual employee - sorry, a part time employee where you had agreed that they were going to work I don't know, Friday, Saturday, Sunday. But over the Christmas period you might want them to work longer hours. You might have more hours for them because that's a busier time. You could agree with them for the next two months that they will work additional hours and those additional hours wouldn’t be then at over time rate until they got over the 152 of the 38.

PN11

You can vary it by agreement and that's what the modern award provides for. Also, you can also use the individual flexibility provisions in your agreement to respond to the particular circumstances of particular employees and your particular business. But in terms of how I have to assess the agreement in relation to the safety net, the modern award says part timers have an agreed number of ordinary hours and if they work more than their agreed number of ordinary hours that is over time, unless you have agree to vary the hours. So if you don't have that provision in there, it would be like losing over time for weeklies. But it's not as rigid as people seem to think it is because it can be varied by agreement. So that was my concern there.

PN12

MR JORDAN: Can I have the opportunity to enlighten (indistinct).

PN13

THE COMMISSIONER: Yes, certainly.

PN14

MR JORDAN: We have what I call permanent part time employees who worked say four days a week and that's their condition of employment and they work their 7.6 hours a day four days a week and they do that regularly, we have got six or seven people who job share and do that. Our accommodation cleaners can work on any day on any number of hours in that day depending on demand that they are employed every week, they're not casual in the extent that they just come into work for three weeks and never work again, they're actually working every single week but their hours are different every single week. The difficulty I have with this, how do I address the issue that all of the cleaners will have different hours every week that they work.

PN15

THE COMMISSIONER: Well, in terms of what the modern award says is they're casuals because what the modern award says is that anybody who is not engaged either as a full time employee or effectively a regular part time employee is a casual.

PN16

MR JORDAN: Even if they may work 20 hours a week every week, but it might be 21 or 19 or 22 or 16, they become casual?

PN17

THE COMMISSIONER: Well, they are. What the award says is that anybody who doesn't meet the definition of a part time employee, and a part time employee is somebody who is defined as having an agreement about the hours. I think it's more than just the hours they work, it's a regular pattern of work specifying at least the hours worked each day, which days of the week the employee will work and the actual starting and finishing times. When the modern award was made this issue arose about unpredictable hours of work and the Full Bench said to allow part timers to work it has to be varied in that way, changes the very nature of part time employment. So the only - in this award it's fairly clear that that is the nature of part time, and I have to then say, all right, if you're part timers, they worked their basic hours were 15 and then next week they worked 21, then I would have to say all right, are they better off under the award or under the agreement because I have to do a calculation that says, is the amount you're paying them enough to compensate them for the loss of over time for those six hours. And it may be that it's enough, it may be that the 25 per cent being paid on every hour is enough, but I have to do that calculation and if it's not then I can't approve the agreement.

PN18

MR JORDAN: So in the terms of the award a causal is entitled to 25 per cent loading on the award rate, our intention with this agreement was there had been a 25 per cent loading for everybody. If we continued along that path with the casuals they would be getting 25 per cent on top of the 25 per cent, they would be getting a 50 per cent loading.

PN19

THE COMMISSIONER: Yes, and that's what you've said it is your intention for your casuals to get 25 per cent on 25 per cent, yes.

PN20

MR JORDAN: But at that stage I was anticipating the accommodation cleaners would be part time not casual.

PN21

THE COMMISSIONER: Right.

PN22

MR JORDAN: Casuals in our tiny organisation would be someone coming in to work for a week at Christmas to provide some extra resources.

PN23

THE COMMISSIONER: Yes, the difficulty is of course that when the part timers works those additional hours they are entitled to over time, which is time and a half - I'm not sure whether it's the first two hours or first three hours in this award because they do vary, some of them have over time. It's time and a half for the first two hours and double time thereafter. So the mathematical calculation I will have to do if you wish to maintain this provision is to see whether paying your part timers 25 per cent more for all hours of work pays them more overall than they would get paid if they worked additional hours at over time. It may well be because what is the kind of pattern of work of your part time cleaners?

PN24

MR JORDAN: Some cleaners may work as little as five hours a week. Other cleaners might work 25 hours a week, but then another week a person who worked 25 might work 13 and then the next week if it was public holiday week or something they might work high 20's again. It's very varied.

PN25

THE COMMISSIONER: Right.

PN26

MR JORDAN: Some of the cleaners only make themselves available one day a week, but other cleaners make themselves available every day of the week.

PN27

THE COMMISSIONER: How unpredictable are the hour changes, is it sort of you know suddenly tomorrow you might have to - today you realise you are going to have to call some extra people in tomorrow?

PN28

MR JORDAN: Yes, it's possible, or people may work extra hours. By midday the day before we might have five accommodation units booked and we have cleaners ready for the next day, and then at six p.m. three people arrive looking for accommodation and suddenly we've three extra units to clean. So it's either the people who have been rostered come in, work the extra hours to clean those units or maybe another cleaner might be available to come and do that clean, so it's very unpredictable.

PN29

THE COMMISSIONER: Yes, and that unpredictability of it makes it sound like it's not permanent, part time employment because the whole idea of permanent part time employment is you are like a full time employee but you work less hours but you have the same kind of predictability of hours. Your full time employees know they're going to work Monday, Tuesday, Wednesday, Thursday, Friday. They can organise their lives around that, or if they're working Tuesday, Wednesday, Thursday, Friday, Saturday, they can work - and part time employees are supposed to have that same kind of predictability because it can impact on how they organise their lives. They're not like casual employees who can have their earning capacity reduced in such a way. So that's the very distinction that the Full Bench when it made the modern award did in terms of creating categories of employment. But I think what you're saying to me is that if you have to have this kind of clause then you are saying then you need to review your agreement in terms of the 25 per cent on 25 per cent.

PN30

MR JORDAN: Correct. If I may what I would then propose and I don't know how this works but I propose that the 25 per cent casual loading be applied to the award rate and that those employees would then be casuals.

PN31

THE COMMISSIONER: The difficulty I have with that is that I could not approve the agreement with that proposed change because the Act expressly says - because that would require an undertaking which would actually disadvantage employees, because at the moment the agreement says that casuals will get 25 per cent on 25 per cent on this rate and because the change you're proposing would reduce the rate of pay paid to casuals I couldn't accept the undertaking. The way the Act works is once we have this conversation about what my concerns are and you respond to them, if I think that the agreement shouldn’t be approved I can give you an opportunity to give me undertakings for example, the one about hours be averaged over a four week period, the one about the safety net for the annualised salaries. None of that will disadvantage anybody because it actually makes things safer for them and better for them. But I'm not allowed to accept an undertaking that actually reduces what people thought they were approving when they voted for the agreement. You see when people voted for this agreement, they voted for an agreement that effectively provided 25 per cent on 25 per cent for casuals. I can't then allow you to take them away without you having to go back and renegotiate the agreement.

PN32

MR JORDAN: All employee discussions, when everybody was sitting around discussing it, the discussion point was that the cleaners would be, on my understanding, part time and they would get the 25 per cent loading on top of the award rates of a part timer. So when they were voting on the agreement, they were voting on the basis that they believed they would be part time and get the 25 per cent loading. When we had the discussions we didn't vote on the agreement on the basis they would be casuals for the 25 per cent plus the 25 per cent. So that the expectation was that the cleaners who participated in the vote was that they would be getting the award rate of 25 per cent.

PN33

THE COMMISSIONER: The Act is very clear, it's not on what change in status people thought they might have as a result of the agreement being made. If the change that is being proposed would disadvantage any group of employees or prospective employees. So for example that change will disadvantage those people who come in at Christmas who work on a very casual casual basis, then I can't accept the undertaking. You have to re-do the agreement. That's if I don't approve it.

PN34

MR JORDAN: Sure. So in that circumstance, in re-negotiation of the agreement with the cleaners on the basis that they are casual and the agreement said that for casual employees the remuneration would be the award rate plus 25 per cent as provided in the modern award and that agreement was then voted on again and that was passed and submitted that would be the process.

PN35

THE COMMISSIONER: If all you provided for the casuals was that they got what they get under the award then the agreement could not be approved because the agreement must make them better off. So if all you provide to casuals is the award, the test is the employees must be better off. So you have to give them something slightly more - - -

PN36

MR JORDAN: So if we said 30 per cent - - -

PN37

THE COMMISSIONER: Yes, that would be fine.

PN38

MR JORDAN: Very well, with a 30 per cent loading on the award rate as a casual, their actual hourly rate would be more than what they actually voted for when the agreement went through the first time.

PN39

THE COMMISSIONER: Yes, I know but I what I have to say is all right, what would casual employees under this agreement have been paid, and it was 25 per cent on 25 per cent. So those people who actually you will treat as casuals, right, we're going to get 25 per cent on 25 per cent, they presumably weren't actually the people who voted on the agreement because they weren't actually employed at the time.

PN40

MR JORDAN: Absolutely.

PN41

THE COMMISSIONER: But that's why I have to be concerned with prospective employees as well. When they come in this Christmas under your agreement, this one, they would have got 25 per cent on 25 per cent.

PN42

MR JORDAN: Yes.

PN43

THE COMMISSIONER: The change you're proposing means they don't, which means it disadvantages people, so I can't approve it if that's the undertaking you wanted to give me. The only undertaking - I can't accepted an undertaking that would disadvantage a group of employees, even though it might advantage another.

PN44

MR JORDAN: Do I have the opportunity of providing a new agreement to the workforce as a whole which includes that casuals will be paid at the award rate, plus 30 per cent and that clause gets built into the agreement and that agreement gets presented to the workforce as a whole and gets resubmitted to Fair Work Australia.

PN45

THE COMMISSIONER: Yes, you have to go through the process of issuing the bargaining notice and all that kind of stuff.

PN46

MR JORDAN: Yes, the whole thing again.

PN47

THE COMMISSIONER: Yes, yes, you can do that. You have two options effectively. You can give me undertakings now and I take them into account when I decide whether to approve this agreement or not. You can decide that you want me to issue a decision about whether I approve this agreement or not. You can withdraw this agreement and present another one. If you presented another agreement that dealt with those other issues I have raised which are not going to have any financial impact on anybody because they simply put in place the flaw that you say is actually already there, and you know how I've actually said how it's not clear whether the 25 per cent loading is intended to cover over time or if over time is provided by the award blah, blah, blah, and you say look, we're intending over time is paid as per the award and will be calculated - so if you just make that clear in the agreement.

PN48

MR JORDAN: In the agreement.

PN49

THE COMMISSIONER: If you fix up all those matters and your casuals clause, provided that casuals would get what they get in the - all their entitlements under the award plus a loading of 30 per cent then your agreement will pass the better off overall test because your loading you have put in for your weekly employees certainly appears to be sufficient to cover - to make them better off and with the protection they are never going to be worse off. So, yes. So they're your options.

PN50

MR JORDAN: Lastly, the 25 and the 25 per cent will be a difficult financial matter for us to (indistinct).

PN51

THE COMMISSIONER: Yes.

PN52

MR JORDAN: So I think I would need to prepare a new agreement.

PN53

THE COMMISSIONER: Do you want to withdraw this agreement?

PN54

MR JORDAN: If that's the process that's required.

PN55

THE COMMISSIONER: No, it's entirely up to you. You can either withdraw it or I can issue a decision which I publish rejecting the agreement.

PN56

MR JORDAN: We will withdraw the agreement.

PN57

THE COMMISSIONER: Very well. If you wish when you re-lodge the new agreement, because I have already looked at this one, if you want me to deal with it next time, when you send in the agreement put in your covering letter that you want it referred to me because I've already considered the earlier agreement. That will mean that nobody else has to go back and do all the checking again. I've already been satisfied about all the other matters.

PN58

MR JORDAN: Fine, thank you for your guidance.

PN59

THE COMMISSIONER: Thank you. I thought it would be easier for us to do it face to face than try and do it by email.

PN60

MR JORDAN: Yes, certainly.

PN61

THE COMMISSIONER: So thank you for coming along We will close this file, and as I say if you want me to deal with the next one just mark it to my attention in your letter.

PN62

MR JORDAN: Yes.

PN63

THE COMMISSIONER: Thank you very much.

PN64

MR JORDAN: Thank you very much.

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