AG2011/15653, Transcript of Proceedings [2011] FWATrans 144 (23 February 2011)

TRANSCRIPT OF PROCEEDINGS

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Fair Work Act 2009 40278-1

AG2010/15653

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

Application by The Trustee for Ladro Greville Street Unit Trust
(AG2010/15653)





Melbourne

WEDNESDAY, 16 FEBRUARY 2011

PN1

THE COMMISSIONER: Thank you. I’ll take the appearances.

PN2

MR C. SMITH: Chris Smith, representing Ladro.

PN3

THE COMMISSIONER: Thank you, Mr Smith. This is an application for approval of a single enterprise agreement. On 21 December, I wrote to the applicant in this matter outlining a number of concerns I had about the agreement in relation to whether the agreement passes the better off overall test. This is an opportunity for you, Mr Smith, to make submissions as to why I should approve the agreement.

PN4

MR SMITH: If the Commissioner pleases. Should I commence proceeding through?

PN5

THE COMMISSIONER: Yes. Thank you.

PN6

MR SMITH: The first point, Commissioner, is clause 1.5, which is the termination of the agreement after the nominal expiry date. I referred to the Fair Work Australia web site and the information current at 15th of the 2nd of this year has Termination After Nominal Expiry Date:

PN7

If an enterprise agreement or agreement-based transitional instrument has passed its nominal expiry date, any of the parties - - -

PN8

THE COMMISSIONER: Sorry. Which section are you quoting from?

PN9

MR SMITH: It’s the Fair Work Australia government web site.

PN10

THE COMMISSIONER: Yes. Can you just start reading that again?

PN11

MR SMITH: Yes. Under the heading Termination After Nominal Expiry Date:

PN12

If an enterprise agreement or agreement-based transitional instrument has passed its nominal expiry date, any of the parties to the agreement may apply to Fair Work Australia for the termination of the agreement.

PN13

Is that consistent with what - - -

PN14

THE COMMISSIONER: No. You say it can be unilaterally terminated by the employer. It can’t be unilaterally terminated. It can only be terminated by Fair Work Australia.

PN15

MR SMITH: Right. If we were to remove the word - - -

PN16

THE COMMISSIONER: I think the other difficulty is that - yes. It can only be terminated in accordance with the act so it can’t be unilaterally terminated by the employer. The employer can make an application.

PN17

MR SMITH: Sure.

PN18

THE COMMISSIONER: This agreement seems to suggest it can be unilaterally terminated by the employer and it can’t be. Any termination must be approved by Fair Work Australia.

PN19

MR SMITH: Okay. Can I ask the Commissioner, are we in a position to make proposed changes with a formal undertaking?

PN20

THE COMMISSIONER: Yes. The way the system works is if I form the view that there are provisions which are inconsistent with the act - say, for example, inconsistent with the NES or, in this case, inconsistent with the act - or I form the view that the agreement doesn’t pass the better off overall test, then you are able to give undertakings in relation to those matters. I’m able to accept those undertakings in certain circumstances. The circumstance in which I can’t accept them is if they would result in substantial changes to the agreement or if they would result in employees being worse off.

PN21

For example, if there was a provision that said - if there was a concern about the agreement because, for example, it didn’t provide for penalties on Sunday and you said, “Well, we just won’t roster anybody who’s entitled to penalties on Sunday to work on Sundays,” that would make them worse off and therefore I couldn’t approve such an undertaking; but yes, you’re certainly able to proffer undertakings to see if we can get this agreement into a state which can be approved; so yes, in relation to that clause, if you simply changed it so it says that, “This agreement may be terminated in a manner consistent with the Fair Work Act,” it would be sufficient.

PN22

MR SMITH: Certainly. We’re prepared to give an undertaking in that regard. The second point, clause 2.25 of the proposed agreement, which relates to probationary employees and one week’s notice of termination, again we are prepared to give a formal undertaking that we remove “probationary” from clause 2.25 and change “one day” to “one week’s notice” of that clause, so the same.

PN23

THE COMMISSIONER: Thank you. Yes.

PN24

MR SMITH: Clause 2 point - - -

PN25

THE COMMISSIONER: Can I just ask this: when you say no notice of termination is required for casual, probationary or fixed-term employees, I presume you mean in terms of fixed-term employees at the end of their contract of employment, so - - -

PN26

MR SMITH: Correct.

PN27

THE COMMISSIONER: Yes. Thank you.

PN28

MR SMITH: Clause 2.2.8 which relates to withholding moneys, we are prepared for there to be an undertaking that we update the agreement to include “by agreement with the employee”. I’m just taking notes as we go through if that’s okay.

PN29

THE COMMISSIONER: Yes.

PN30

MR SMITH: The proposed clause 3.3.1, which is the safety net around salaried employees, again we would include in the formal undertaking that we would include the annual reconciliation in accordance with the awards.

PN31

THE COMMISSIONER: Yes.

PN32

MR SMITH: Clause 3.4 - yes. There are no Australian pay and classification scales. The base rates in the award - we’d need to update the terminology to include the Fair Work panel decisions, and that’s the base rate that we use to calculate the other flat rates and just to pick up the point that further on, Commissioner, in your questions, some of those rates were out by one cent. We would certainly adjust those as well.

PN33

Part 4, hours of work, overtime and breaks. We propose a four-week hours of work roster and through the negotiation process with our employees, the award provision for part-time employees was considered restrictive so we’ve proposed a clause that increases flexibility for both parties and that’s, we say, reflected in the increased average rate that would apply across the seven days. We do have rosters and a model which we’ve used to calculate that rate which we could then provide as part of this hearing.

PN34

THE COMMISSIONER: When the full bench considered the provisions about part-timers in these awards and rejected proposals that part-timers not have an agreed pattern of work that could only be changed by agreement, they - I mean, arguments were made that more flexibility was desirable but the full bench certainly took the view that if part-timers can just be rostered at any time and can have hours that vary between three hours and 152 on any day of the week, it was hardly part-time employment. It’s because, as the full bench said in the modern award decisions, it does not provide any mechanism whereby part-timers are able to actually balance work and family. It makes provisions of child care and those kind of things nigh on impossible.

PN35

Casual employees obviously have that because, by the very nature of casual employment, they’re casual, but for part-time employees to have no guarantee of when they work or the hours they work is a very significant change and a significantly less beneficial entitlement than that provided in the modern award.

PN36

There have certainly been agreements which I have approved because the level of compensation was sufficient but I need to be convinced that part-time employees in particular have sufficient compensation to warrant them losing those entitlements which the modern award give them, particularly in circumstances where the modern award provides that part-timers who have to have this regular pattern of work can agree to vary that in writing, so it’s not as though you’ve got to say, “Well, you’re working 20 hours and next week I need you. It’s a busy time. There’s some extra work available. Would you like to work some additional hours?”

PN37

A part-timer can agree in those situations to vary their hours of work but it’s that fundamental lack of certainty which certainly the full bench has said means it hardly seems like part-time employment. I’d really need to be convinced there’s sufficient compensation in your rates to take that into account.

PN38

MR SMITH: We would certainly be prepared to review that clause to include some certainty around hours and days and so forth for part-timers on the basis that we could, by agreement, change - - -

PN39

THE COMMISSIONER: Yes.

PN40

MR SMITH: 4.5.3 of the proposed agreement, Overtime for Part-Time and Full-Time Employees. Again, that was based on the four-week model and the first two hours were time and a half and hours thereafter were double time.

PN41

THE COMMISSIONER: I think the way overtime works in the award - because you say that you only get overtime here if you work in excess of the 152 hours, but I think overtime works in the award, for example, for a permanent, full-time weekly employee, is that if their ordinary hours are worked and they’re working - let’s say they’re rostered to work 10 hours one day, eight hours the next, it’s sort of averaged over the four weeks. If they work in excess of those eight hours, their rostered hours, then they get overtime. It doesn’t mean that you have to work in excess of 152 hours.

PN42

Let me just check because despite the fact that we have modern awards which you would have thought were universal, there are some differences between the different - yes. The change in terms of the entitlements is your agreement provides for only overtime if you work more than 152 hours in a month where as the modern award says that you get overtime if you work outside your rostered hours, and that applies to part-timers and full-timers.

PN43

If the part-timer was only rostered to work four hours on that day and somebody doesn’t turn up for a shift and you say to them, “I’m directing you to stay and work,” as opposed to, “I agree to vary my hours, to change them,” but, you know, “You have to stay and work,” then that would be overtime. If a full-time employee was rostered, say, to work 10 hours and you said, “No. You’ve got to stay behind and work another two hours,” that would be overtime even though they didn’t exceed the 152 hours in the month. That’s the difference between that and the modern award.

PN44

MR SMITH: Yes.

PN45

THE COMMISSIONER: Again, to not have that would require - I’d need to be convinced that the rates sufficiently compensate people for not getting that.

PN46

MR SMITH: 4.6, the meal break provision. That changed from, I think, five hours to five and a half hours.

PN47

THE COMMISSIONER: Yes.

PN48

MR SMITH: It’s at the request of employees that often prefer not to have the break but work through because they earn more money by not having a break so that’s why that clause got up in the negotiations.

PN49

THE COMMISSIONER: Yes. That doesn’t necessarily surprise me. Just bear with me. I think the modern award provision - and of course, breaks have been put into awards for a whole variety of reasons, and one is the occupational health and safety issues associated with people working without breaks, but of course the break provision in the award is more extensive than yours in the sense that in the modern award, if you don’t get a break - under your agreement, if you don’t get a break, you just get paid for working, which is not unsurprising because you are working, but under the modern award, if you don’t get a meal break, you get 150 per cent, so you get a penalty loading. It’s an incentive to make sure that people get the break.

PN50

There’s also circumstances where people, in addition to the half hour unpaid meal break, can receive an additional paid 20-minute meal break, and your agreement makes no provision for that. To be blunt, in terms of the 5.5, I’m not particularly fussed. I mean, some of the old awards used to enable you to work up to, I think, six hours without the break so, you know, to have it after five or five and a half is really not that significant provided people get the break.

PN51

It’s the other provisions in the modern award in relation to what happens if you don’t get a break, because under this system, there is no incentive. I mean, all it says is, “You’ll get paid.” Well, I would expect you to get paid if you’re working. Anyway, I mean, the reality is the better off overall test is an overall - - -

PN52

MR SMITH: Yes, better off overall.

PN53

THE COMMISSIONER: Yes, test.

PN54

MR SMITH: Commissioner, if I can say that what plays out in the operation, generally speaking, as a rule is there’s a communal meal which is provided at around 5 pm which is an opportunity - which is a paid meal and it’s actually a paid meal break. People don’t necessarily clock on and off for that particular break, and it’s a meal at no cost to the employee so we see that as a benefit, which is effectively a paid break.

PN55

THE COMMISSIONER: Well, if you put that in your agreement, then obviously that would be a more beneficial entitlement.

PN56

MR SMITH: Of course.

PN57

THE COMMISSIONER: But it’s not there so I can’t take it into account, because it’s not there, and I have to have regard to the agreement.

PN58

MR SMITH: Sure. Of course.

PN59

THE COMMISSIONER: If you want to put it in, then of course that would not be a problem.

PN60

MR SMITH: Could we consider that and get back to you?

PN61

THE COMMISSIONER: Yes.

PN62

MR SMITH: Clause 4.7, the rostering provision. We propose an adjustment, an undertaking that we would post the roster with seven days’ notice, and the roster can be changed at any time by mutual agreement. Clause 5.1.3, the annual leave provision. The intent of that clause is to allow employees to take annual leave in advance when they have not accrued the entitlement.

PN63

THE COMMISSIONER: I see.

PN64

MR SMITH: Perhaps there’s an opportunity to refine the clause to reflect it if it’s not clear.

PN65

THE COMMISSIONER: Yes.

PN66

MR SMITH: Perhaps we need to update that.

PN67

THE COMMISSIONER: Yes. That’s fine.

PN68

MR SMITH: The clause 5.1.8, cashing out of annual leave. I understand that is permitted under the - - -

PN69

THE COMMISSIONER: Yes. You can cash out annual leave but you must be left with four weeks.

PN70

MR SMITH: We propose that we could update that clause to include that an employee must have a balance of four weeks after cashing out.

PN71

THE COMMISSIONER: Yes, that’s right.

PN72

MR SMITH: Now, the base rates, Commissioner. As noted, we would adjust those to reflect the current rates but the one cent or so.

PN73

THE COMMISSIONER: Yes.

PN74

MR SMITH: We can provide to the Commissioner - we have our model whereby we took rosters and analysed it in order to actually get a percentage to load rates for casuals and part-time and full-time employees which we can provide the Commissioner for consideration.

PN75

THE COMMISSIONER: Thank you.

PN76

MR SMITH: But just to note the casual rate calculated out at just under 35 per cent and the agreement proposed rate applied is 37 per cent, so it’s slightly more than what was calculated; likewise with full-time, part-time rate, which came in at 12.72 per cent as an average. We increased that to 15 per cent as a flat rate to determine the rates. We’ll provide that to the Commissioner.

PN77

THE COMMISSIONER: Thank you.

PN78

MR SMITH: And the accident makeup pay, we would incorporate that into - an undertaking we’d incorporate that into the agreement.

PN79

THE COMMISSIONER: Okay.

PN80

MR SMITH: I understand they were the list of questions the Commissioner had.

PN81

THE COMMISSIONER: Yes. They are the issues. Could you provide me with your proposed undertakings in writing and the spreadsheet or the calculations that you’ve got? Do you have those in electronic form?

PN82

MR SMITH: We do.

PN83

THE COMMISSIONER: Could you email those to chambers, because that enables me actually to use it and work on it. Once I receive the undertakings and the spreadsheet, I’ll review those. If I have any further questions about it or if there are any other matters that I’m not satisfied with in relation to your proposals, I will contact you and give you another opportunity to review - so if I form the view on the basis of everything I have before me that I’m not going to approve the agreement, then I will contact you again to advise you of that, to give you an opportunity to address any of the concerns I may still have.

PN84

For example, if I form the view that the amounts may compensate for the lack of penalties but maybe I’m concerned that - and this has arisen in some matters where you have certain parameters that you would make your assumptions on. Let me give you an example. I had an agreement, and this is obviously a problem where the rates are so close to the modern awards, that the differences in some cases ranged, I think, in one agreement I had, between a dollar a week and $5 a week difference between the agreement and the modern award. All that needs to go wrong there is that you change the way you roster and everything is no longer there, and none of the parameters were part of the agreement. If I have any of those concerns, I will contact you to discuss them with you before I make my final decision. Okay?

PN85

MR SMITH: Thank you.

PN86

THE COMMISSIONER: Thank you.

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