AG2012/3706, Transcript of Proceedings [2012] FWATrans 267 (21 March 2012)

TRANSCRIPT OF PROCEEDINGS

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Fair Work Act 2009 1033054-1

COMMISSIONER JONES

AG2012/3706

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

Application by Context Pty Ltd
(AG2012/3706)





Melbourne

2.36 P.M., TUESDAY, 13 MARCH 2012

THE FOLLOWING PROCEEDINGS WERE CONDUCTED VIA
TELEPHONE CONFERENCE AND RECORDED IN MELBOURNE

PN1

THE COMMISSIONER: Good morning. Ms Johnson, is it?

PN2

MS C. JOHNSON: Yes it is.

PN3

THE COMMISSIONER: This is Commissioner here. I have convened this telephone conference hearing in order to deal with the matters that I raised with you through my Associate by way of the letter dated 6 March 2012 and I might indicate, Ms Johnson, that we did receive a submission or an explanation by you in relation to the matters I raised, thank you very much. I am just going to go through them one by one and see where we go from there, okay?

PN4

MS JOHNSON: Yes, that sounds good.

PN5

THE COMMISSIONER: The first one is in relation to what is called a notice of employee representational rights and I am not sure how familiar you are with the Fair Work Act but under the Act I can only approve an agreement that has been genuinely agreed to and that's under section 186(2)(a) of the Act which refers then to another section which is section 188A of the Act which provides that an agreement is genuinely agreed to in certain circumstances and one includes where employees are not required to approve an enterprise agreement until 21 days after the last notice of employee representational rights is given. That sub-section then refers you back to a section which is section 173 which requires that before the employer - I'll go to that section just for your benefit. If an employer wants to make an enterprise agreement then they must give a notice of representational rights to employees and that must be in accordance with section 174. So I'm going through this long, convoluted route to explain to you why this is important.

PN6

MS JOHNSON: Yes.

PN7

THE COMMISSIONER: Section 174 sets out - it's headed, "Content of notice of employee representational rights," and it sets out what a notice must specify, certain matters and at sub-section 6 of section 174 it says that regulations may prescribe the matters or form of the notice. The parliament has passed regulations which set out in schedule 2.1 of the regulations a form of the notice to be given to each employee. If I am to approve an agreement under section 186, which is the approval sub-section, I have to be satisfied that each of your employees - and I know that they were only seven - was given a notice of employee representational rights that is in the form and has a content that is required by the Act. Would you just explain to me what steps you took to provide your employees - I know that you said that they determined they want to represent themselves and that is fine, but what steps did you take to bring to the employees attention the requirements under section 174 of the Act?

PN8

MS JOHNSON: Thank you. I think I would probably say first depending on how familiar you are with the Fair Work Act you can be assured I'm not very familiar with it, being an employer in a small business.

PN9

THE COMMISSIONER: Sure I understand that.

PN10

MS JOHNSON: So we are probably a reasonably (indistinct) employer of our staff (indistinct).

PN11

THE COMMISSIONER: No, they're quite common, you would be surprised these days and the Act does have a lot of sections and there are a lot of steps to take, so it's not an unfamiliar circumstance, Ms Johnson.

PN12

MS JOHNSON: Thank you. Look, I think we did not - (indistinct) we did not formally hand out the notice that you're describing under section 2.1, that schedule that you mentioned. We have not handed out a standard notice in that format. What we have done is discussed the previous process that we did for the previous enterprise agreement with staff and so in a sense we have been inviting (indistinct) under the previous legislation I suppose and talked about whether staff wanted to represent themselves. We clearly talked about whether anyone was a union member and we would want someone else to represent them from a union perspective but we haven't fulfilled the requirements that you have described. What do we then need to do?

PN13

THE COMMISSIONER: In effect you need to really go through the process again. So what you would need to do is - what I suggest is that you look at - I mean the critical thing is that you have a notice that is in writing. It can be by email. I have had circumstances where I am satisfied if the email refers to the particular website of Fair Work Australia. But it might be just easier for you to - if you go to - I assume that you're Internet savvy and all of that?

PN14

MS JOHNSON: Yes.

PN15

THE COMMISSIONER: If you look up the Fairwork@regulations2009, if you go to the Fair Work site you will be able to locate it through there, and then you locate schedule 2.1 of the regulations and it is headed notice of employee representational rights. I often find it is easier for employers simply to use that as a base. You will find it is one where you can just cut and paste and insert your name in, and that way you're sure that you've covered yourself. But the most critical thing as far as the Act is concerned is that the notice must specify that employees can appoint a bargaining representative to represent the employees. As I say, the way the Act reads it seems, at least to me, that it requires a written notice of some sort. It is easier in a way just to use that schedule 2.1 as your guide.

PN16

MS JOHNSON: Right, okay.

PN17

THE COMMISSIONER: You must do that, you must give it to the employees, even though I know you've discussed it all with them, at least 21 days before you ask them to approve the agreement.

PN18

MS JOHNSON: Right, okay.

PN19

THE COMMISSIONER: You need to inform the employees of the way that they're going to vote, whether it's by - have you read the particular provisions of the Act? That is not a judgement I'm making, just an inquiry?

PN20

MS JOHNSON: Since receiving the notice of this meeting today I have looked under that section of the Act, yes.

PN21

THE COMMISSIONER: There is also various pre-approval steps, they start at sub-section 180, Ms Johnson. They are called pre-approval steps and applications for Fair Work approval. They talk about the steps that you need to take before the employees vote on the agreement. So you just need to say when the vote will occur, how it will occur and so forth, but they are required to be met in order for Fair Work Australia to be satisfied that the agreement was genuinely approved and that's because the key section, which is section 186, directs us to those sections. So I just advise you to look at those as well, so next time you come around there's not all these steps that pull you up. I was satisfied with your pre-approval steps, it was just the notice that seemed to me to be the main issue, and I realise there is only seven people but it is the requirement under the Act that I must apply.

PN22

MS JOHNSON: Sure.

PN23

THE COMMISSIONER: The key thing there is get your notice to the employees and do it at least 21 days before they are required to vote. Make sure you advise your employees when the vote will occur, over what period and how they can vote for the agreement. That is that first one, Ms Johnson, and I thought maybe I'd just go through the other matters so that you can consider them if you're going to put the agreement back to the employees again.

PN24

MS JOHNSON: Yes, can I just ask one question about that first matter which is how would that then be documented in the forms that we then submitted. Will we need something signed by employees for example?

PN25

THE COMMISSIONER: You have the employees signing the agreement and that's fine. It's really just the way that you answer the questions. One of the questions I know asks about - - -

PN26

MS JOHNSON: I think it may ask for a date, I'd need to go back.

PN27

THE COMMISSIONER: Yes, it's all those things you need to look at.

PN28

MS JOHNSON: Okay.

PN29

THE COMMISSIONER: I'm looking at form 17, employer's declaration and support of application for approval of enterprise agreement. You will see that question 2.4 says, "Was the notice of employee representational rights applying with section 174 given to each employee." It says, "If yes, please attach a copy of the notice." I realise that there wasn't a written notice or was alerted to that because there wasn't a copy attached, even though you went through those steps.

PN30

MS JOHNSON: Yes, thank you.

PN31

THE COMMISSIONER: Otherwise your explanatory thing - just be careful of the 21 days and your explanation of how they were advised was fine.

PN32

MS JOHNSON: Okay.

PN33

THE COMMISSIONER: That's really the key one from your point of view.

PN34

MS JOHNSON: Okay.

PN35

THE COMMISSIONER: The next points I raised were really again because of the Act itself and I understand from your response that your - we will deal with the 40 hour week that you have in place and you are going to transition to a 38 hour over the course of the agreement, well in fact in June this year and I understand that in previous agreements you have had the 40 hour week but the thing is in the new Fair Work Act one of their requirements under section 186, which I referred to before, is the critical provision that I have to be satisfied about before approving at sub-section 2C is that section 55 has to be complied with.

PN36

Section 55 deals with what is called now national employment standards, I think they used to be called fair minimum standards before and section 55 says that an agreement can't operate to exclude a national employment standard. If you look at section 62(1) of the Fair Work Act which is part of the national employment standards which are like the standard positions, they cover hours of work, parental leave and so forth. Section 62(1), which is headed, "Maximum weekly hours," says, "An employer must not require an employee to work more than the following number of hours in a week, unless the additional hours are reasonable." So for a full time employee it's 38 hours.

PN37

The effect of that is that of course an employer can require more than 38 hour ordinary time per week, but that is then overtime, and I know you have got toil, and the additional hours must be reasonable, which I assume is why you then suggested - I'll go to that in a minute. The thing about that, Ms Johnson, is that 38 hours is the standard and what I am trying to get my head around is how we can meet the interest of your business but not have an agreement that operates to exclude that standard. I see that you have "toil" which is fine, that's in lieu of overtime, that's not a problem, that's quite okay, and you have salary packaging or salaries and you have very high salaries, I can see all that.

PN38

MS JOHNSON: Yes.

PN39

THE COMMISSIONER: You say that moving from a 40 hour week to 38 without productivity changes produces significant cost which is why you are having the phasing in. Can you explain, given you don't pay overtime and you don't - is it the extra hour under "toil" that produces the extra cost of going to a 38 hour week?

PN40

MS JOHNSON: I guess what it does essentially is we're looking at going to a 38 hour week and retaining salaries at the same level and so the consequence (indistinct) our time essentially. What it would mean is a reduction in what was available to the business to earn its income by reducing the number of hours. The staff did some calculations of what the cost of that would be and looked at different options for how we could then adjust things to meet that cost, including changing - for extra benefits for staff and so on. And staff really felt there should be - that they were happy to wait for this to come in until the end of the financial year if management was also taking action which was increasing our count out rate. It sounds like a sort of an easy thing to do, but in fact the risk is it makes us less competitive in the marketplace. So for us as a small business it's a fine line we walk.

PN41

THE COMMISSIONER: If 9.4 of your proposed enterprise agreement read something like a full time working week, and I am not suggesting this, but is 38 hours in a week with - what was your suggestion - with 38 hours and additional reasonable, put the word "reasonable", as required. Is that what you were suggesting in your question in your response?

PN42

MS JOHNSON: Yes, it was, something like that, making sure that our wording really accorded with the Act.

PN43

THE COMMISSIONER: Yes, and what I would suggest you put the word "reasonable" between "additional" and "hours".

PN44

MS JOHNSON: Yes.

PN45

THE COMMISSIONER: The reason for that is because section 62 of the Fair Work Act which is part of the national employment standards talks about a 38 hour week plus additional hours that are reasonable. The concept there began with this notion of family/life balance, but "reasonable" can mean a whole lot of things and in the Act it talks about the needs of the workplace and the needs of the employees and so forth. It's a balancing act. If you did that how would you re-word 9.9, the equivalent of one week's - because then toil would accrue - how would toil then accrue, that's what I was wondering.

PN46

MS JOHNSON: Okay, so the reason for 9.9 is to encourage the taking of accrued toil as its whole purpose, rather than people building up accrued toil which is a loss of balance issue and there are a number of other points in the enterprise agreement that are about that sort of life/work balance.

PN47

THE COMMISSIONER: Yes.

PN48

MS JOHNSON: Maybe it's not clear from us - - -

PN49

THE COMMISSIONER: No, I can see the - - -

PN50

MS JOHNSON: That's its purpose. It might seem like we're saying that's all you can - - -

PN51

THE COMMISSIONER: No, no, I've seen that quite commonly. I'm just wondering 1) if you did change the wording to 38 hours and additional hours, reasonable hours as required. Does that then mean that toil accrues faster? That is after 38 hours rather than 40, I just wondered what you thought that change in wording would mean from your point of view in practice?

PN52

MS JOHNSON: I mean I guess the implication of that change in wording would mean that when the enterprise agreement was approved we would be starting at a 38 hour week, I think that's how I would read it.

PN53

THE COMMISSIONER: I'm not sure that I have any other choice really than to say yes, I think that's what you need to do.

PN54

MS JOHNSON: Is there a problem with the wording of 9.9, does it imply - - -

PN55

THE COMMISSIONER: No, I'm quite happy with that if you want to change the 38 hours. That's quite common that people take their time, that there is a cap put on it because of the very reason that you're talking about.

PN56

MS JOHNSON: Yes.

PN57

THE COMMISSIONER: My suggestion of course is just a recommendation is that if - setting aside this notice of employee representational rights and I think your decision that you are going to start the process again, that if you amend your proposed enterprise agreement clauses 9.4 to conform with the national employment standards in the way that we've discussed.

PN58

MS JOHNSON: That's right, yes.

PN59

THE COMMISSIONER: The redundancy was an issue again of the national employment standards, it was really about the definition of redundancy that you have and nothing else. I see that you have a generous vis-à-vis anything else, a generous redundancy, you provide for two weeks and so forth, but what I have to do is compare and let me just find the section. Again as part of the national employment standards it covers redundancy and section 119(1) talks about an employee entitled to redundancy pay where an employee is terminated under two circumstances. One is at the employer's initiative, that just means that you make the decision. But here is the gist of it, "Because the employer no longer requires the job by the employee to be done by anyone, except where this is due to the ordinary and customer turnover of labour." It seems to me that clause 34.1.1, "Significant diminution or cessation of work performed by an employee," would fall within that concept of an employer no longer requires a job to be done by any employee.

PN60

MS JOHNSON: Yes.

PN61

THE COMMISSIONER: Because this is a definition of redundancy that goes back 50 years, it's one of those industrial changes in work method, and possibly financial necessity which is you don't require the job to be done by anyone because of business reasons and so forth.

PN62

MS JOHNSON: Yes, an area of the business has contracted completely.

PN63

THE COMMISSIONER: Yes, that's right but the 34.1.4 definitely is about work performance, not redundancy in the industrial thing and that becomes a question of unfair dismissal under the Act. You're a small business so it would have to be someone who had been employed there for a year, was a non-fixed term employee and so forth. But again my suggestion is that you look at using perhaps the wording in section 119.

PN64

MS JOHNSON: Yes, (indistinct).

PN65

THE COMMISSIONER: Yes, and that way you pick up, apart from the work performance which I would have to say to you would not be seen as a redundancy on operational requirements, but if you pick those up you're covering all those other points because as I said there's two circumstances where the redundancy definition kicks in. One is because the employer no longer requires the job to be done by anyone and the other one is the insolvency or bankruptcy of the employer which of course is a bit obvious.

PN66

MS JOHNSON: Yes.

PN67

THE COMMISSIONER: But I think if you had more general terms and understand that that's part of it you might be in a better position if you use the definition.

PN68

MS JOHNSON: Sure. It's interesting isn't it that these clauses are the same within our existing enterprise agreement.

PN69

THE COMMISSIONER: Was that approved under the Fair Work Act?

PN70

MS JOHNSON: No, it was under the previous Act.

PN71

THE COMMISSIONER: Yes, you see it's changed. Those requirements have changed.

PN72

MS JOHNSON: Yes, yes.

PN73

THE COMMISSIONER: So that's why you're dealing with - yes.

PN74

MS JOHNSON: That's fine.

PN75

THE COMMISSIONER: I would suggest you again look up section 119(1) and just pick up that wording and you have got yourself covered, other than my advice that you can't - the courts and Fair Work Australia won't treat a termination for work performance reasons as a redundancy. Redundancy really means where the position, you know the duties of the employee are not to be done by anyone else. Now, there is also circumstances where the duties of the employee - some of the duties go to other employees but that's still a redundancy because their position really has gone. Because often you will make a structural change or organisational change. The particular position has gone but some of the duties may have gone too, other people within (indistinct).

PN76

MS JOHNSON: I think that that clause 134.1.4 certainly wasn't intended to be performance. I can see while one could certainly read it that way, but rather because we've got a number of specialisations in our practice that if there was a shift in the orientation of the marketplace it might mean that some people literally couldn't move from being an environmental scientist to an architect.

PN77

THE COMMISSIONER: Yes.

PN78

MS JOHNSON: So it's more that kind of thing but you know, that's - - -

PN79

THE COMMISSIONER: I suppose in that circumstance you would be wanting a different position and the position of the environmental scientist would no longer be required because of the market changes and so therefore that would be a redundancy.

PN80

MS JOHNSON: Yes, I think that's right, I think we've gone into too much detail.

PN81

THE COMMISSIONER: Yes, okay. The last one was really just a minor one.

PN82

MS JOHNSON: Yes.

PN83

THE COMMISSIONER: In the dispute settlement but it's just something to tidy up, that wouldn’t prevent the approval of the agreement itself. But certainly the notice of employee representational rights and those two other matters are matters that would be of concern. The reason I had this telephone conference is because there's two ways of going about this, one is that you withdraw your application or I make a decision dismissing it. So I like to give people the opportunity, and whilst I'm not saying what my decision is you can see the issues that would be troublesome.

PN84

MS JOHNSON: Yes.

PN85

THE COMMISSIONER: If it wasn't for the notice of employee representational rights there is possibly - I could have taken undertakings from you about the other clauses but I'm of the firm opinion that it would be very difficult for me to approve the agreement since it is sort of centre stage in the approval process given the absence of the notice of employee representational rights. As inconvenient as it is my suggestion is that you start the process again and just follow those steps that I've gone through and if you are inclined to amend those two clauses or it's three that I've drawn your attention to then your approval process will be smooth next time.

PN86

MS JOHNSON: Are there any issues for us as to whether - I think you are asking whether you want to withdraw our application?

PN87

THE COMMISSIONER: Yes, that just simply means you withdraw it. There's no negative against you. If you persist with it and say - one option is to say, well I'm going to give an undertaking that the 40 hour week really is the 38 hour week and the redundancy is to be read as consistent with section 119 of the Act then I would have to make a decision about the representational rights. If I make a decision when I make the decision, if I approve it that's fine but if I dismiss it then you have to start again in any event. Which is why I'm giving you - I'm trying to tread the delicate balance of not appearing to make up a decision right now but give you the opportunity to more efficiently get through the process.

PN88

MS JOHNSON: Yes, well it seems to me that the sensible course of action is to withdraw our application, go through those steps and view those particular clauses that we have discussed and then make our application again.

PN89

THE COMMISSIONER: Yes, all right. If that is your decision you will need to advise my Associate. I am just going to check on the - there is a form 50 under the Fair Work webpage with all the forms, because you would have been familiar because you downloaded the other forms.

PN90

MS JOHNSON: Yes.

PN91

THE COMMISSIONER: It's called a notice of discontinuance.

PN92

MS JOHNSON: Right.

PN93

THE COMMISSIONER: That is the formal way to withdraw your application. I emphasise that there is no judgement about why you did that, people do that all the time in any event and this is how I often handle matters and people make decisions to do that. So the best way is for you to download that notice and to send a copy of it either scanned by email, attached to an email or faxed to my Associate who is on the notice that you got for the hearing, Katrina Alviano.

PN94

MS JOHNSON: Yes, that's fine.

PN95

THE COMMISSIONER: You might want to note to Registry when you apply for approval next time that this has been before Commissioner Jones, and hopefully it gets to me and I can deal with it very quickly for you.

PN96

MS JOHNSON: Yes, what is the usual approval time?

PN97

THE COMMISSIONER: I can do things - it depends on the issues one finds because one has to go back and forth, but assuming I got it and looked at it and was satisfied then probably a two week turn around.

PN98

MS JOHNSON: Okay, that's amazing. A short period of time, we weren't sure how long it would be.

PN99

THE COMMISSIONER: Because I've looked at it very carefully already. If it went to another member I can't say how long, but that's why it would be helpful to say to Registry that an earlier application went before Commissioner Jones and you request it go back to Commissioner Jones.

PN100

MS JOHNSON: Terrific. Thank you very much for your assistance and I shouldn’t call it advice but assistance and guidance on this.

PN101

THE COMMISSIONER: That's my pleasure. I am going to now use formal language and say I adjourn this proceeding which means it's ended, and if you can forward that notice of discontinuance form 50 to my Associate as soon as possible then I'll put the file away and you can lodge a new one in due course.

PN102

MS JOHNSON: Thank you very much, Commissioner.

PN103

THE COMMISSIONER: Goodbye, Ms Johnson.

PN104

MS JOHNSON: Goodbye.

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