Application by Talice Security Services Pty Ltd [2013] FWC 463 (21 January 2013) [2013] FWC 463 FAIR WORK COMMISSION DECISION Fair Work Act 2009 s.185 —Enterprise agreement Talice Security Services Pty Ltd (AG2012/8611) COMMISSIONER LEWIN MELBOURNE, 21 JANUARY 2013 Talice Security Services Enterprise Agreement 2012 - Security Industry Award 2010 - better off overall test - undertakings - hours of work - remuneration - comparison of terms of Agreement and terms of Award - reasonable additional (preferred) hours - loaded all purpose rates for up to average of 120 hours per fortnight. [1] This decision concerns an application for approval of an enterprise agreement. The application is made by Talice Security Services Pty Ltd (Talice). The enterprise agreement is known as the Talice Security Services Enterprise Agreement 2012 (the Agreement). [2] The application was filed on 2 November 2012, accompanied by a Form F16, as required by the Fair Work Australia Rules and was signed by Walter Turnbull, Director. The application states that there was no union bargaining representative for the agreement. The application also states there was no other bargaining representative for the Agreement. [3] The application was also accompanied by a Form F17 Signed by Tom Turnbull, Manager and a Security Guard, P O’Brien. [4] For an enterprise agreement to be approved and given statutory force under the Fair Work Act 2009 (the Act) the agreement must pass the better off overall test prescribed by s. 186 of the Act unless the Tribunal is satisfied that because of exceptional circumstances, the approval of the agreement would not be contrary to the public interest. [5] When an enterprise agreement will pass the better off overall test is provided for and governed by s.193 of the Act. The immediately relevant provisions of s. 193 are those set out in s. 193(1) the terms of which are set out below: “(1) An enterprise agreement that is not a greenfields agreement passes the better off overall test under this section if FWA is satisfied, as at the test time, that each award covered employee, and each prospective award covered employee, for the agreement would be better off overall if the agreement applied to the employee than if the relevant modern award applied to the employee.” [6] The relevant award for the purposes of this application is the Security Industry Award 2010 (the Award). [7] On reading the terms of the Agreement I became concerned that the terms of the Agreement do not pass the better off overall test. [8] The Tribunal may approve an enterprise agreement with undertakings. Such an approval is governed by the provisions of s.190 of the Act which are set out below: “190 FWA may approve an enterprise agreement with undertakings Application of this section (1) This section applies if: (a) an application for the approval of an enterprise agreement has been made under section 185 ; and (b) FWA has a concern that the agreement does not meet the requirements set out in sections 186 and 187 . Approval of agreement with undertakings (2) FWA may approve the agreement under section 186 if FWA is satisfied that an undertaking accepted by FWA under subsection (3) of this section meets the concern. Undertakings (3) FWA may only accept a written undertaking from one or more employers covered by the agreement if FWA is satisfied that the effect of accepting the undertaking is not likely to: (a) cause financial detriment to any employee covered by the agreement; or (b) result in substantial changes to the agreement. FWA must seek views of bargaining representatives (4) FWA must not accept an undertaking under subsection (3) unless FWA has sought the views of each person who FWA knows is a bargaining representative for the agreement. Signature requirements (5) The undertaking must meet any requirements relating to the signing of undertakings that are prescribed by the regulations.” [9] In Bupa Care Services Pty Ltd and P & A Securities Pty Ltd as trustee for the D’Agostino Family Trust T/A Michel’s Patisserie Murwillumbah and others 1 the Full Bench of Fair Work Australia considered the approach to consideration and determination of applications for approval of enterprise agreements and said as follows: “[42] As earlier indicated, s.190 of the FW Act provides that if a s.185 application for approval of an enterprise agreement is made and Fair Work Australia has a concern the enterprise agreement does not meet the requirements in ss.186 and 187, one of which due to the operation of the Transitional Act is that Fair Work Australia be satisfied the enterprise agreement passes the “no-disadvantage test”, Fair Work Australia may approve the enterprise agreement if satisfied that a written undertaking from the employer meets the concern and the effect of Fair Work Australia accepting the undertaking is not likely to cause financial detriment to any employee covered by the enterprise agreement or result in substantial changes to the enterprise agreement. Pursuant to s.191 of the FW Act, if Fair Work Australia approves an enterprise agreement after accepting a written undertaking in relation to the enterprise agreement, the undertaking is taken to be a term of the enterprise agreement. [43] The Explanatory Memorandum to the Fair Work Bill 2008 said in respect of then cl. 190: “Clause 190 – FWA may approve an enterprise agreement with undertakings 803. This clause provides that FWA may approve an enterprise agreement with undertakings where the approval requirements in clause 186 and 187 have not been met. 804. Subclause 190(1) provides that this clause only applies if FWA has a concern that the agreement does not meet one or more of the requirements in clauses 186, 187 and 189. • For example, an enterprise agreement may contain a term that the employer will not approve requests for annual leave during the end of financial year accounts processing. 805. Subclause 88(2) provides that an employer must not unnecessarily refuse to agree to a request by an employee to take paid annual leave. FWA may be concerned that the term might breach clause 55 (which deals with the interaction of enterprise agreements and the NES) because it excludes subclause 88(2). Paragraph 186(2)(c) requires FWA to be satisfied that the terms of an agreement do not contravene clause 55. FWA might accept an undertaking from the employer that it will not unnecessarily refuse an employee’s request to take paid annual leave at any time, including during the end of financial year accounts processing. Note that the fact that the employer needs all employees to work at this time would be relevant to whether a refusal was unreasonable under subclause 88(2). 806. Subclause 190(2) enables FWA to approve the agreement under clause 186 or clause 189 where it is satisfied that the undertaking clarifies the intended operation of the agreement. 807. Subclause 190(3) provides that FWA may only accept a written undertaking from one or more employers covered by the agreement if FWA is satisfied that the effect of accepting the undertaking is not likely to cause financial detriment to any employee covered by the agreement, or result in substantial changes to the agreement. This enables FWA to accept an undertaking that addresses a concern it has, e.g., about whether an enterprise agreement passes the better off overall test under clause 193.” [44] Section 190 bears similarity to s.170LV(1)(a) of the WR Act prior to its amendment by the Workplace Relations Amendment (Work Choices) Act 2005 (Cth). [45] Section 170LV(1)(a) provided that: “(1) If, under section 170LT or 170LU, the Commission has grounds to refuse to certify an agreement: (a) the Commission may accept an undertaking from one or more of the persons who made the agreement in relation to the operation of the agreement and, if satisfied that the undertaking meets the Commission’s concerns, certify the agreement”. [46] Section 170LT set out matters in respect of which the Commission was required to be satisfied to certify an agreement and included that the agreement passed the “no-disadvantage test”. [47] Of particular note, s.170LV(1)(a) referred to the Commission accepting an undertaking meeting its concerns, being concerns that provided grounds for the Commission to refuse to certify the agreement. [48] The Explanatory Memorandum to the Workplace Relations and Other Legislation Amendment Bill 1996 said in respect of s.170LV: “New section 170LV – Other options open to Commission instead of refusing to certify an agreement 9.106 This new section sets out alternatives open to the Commission, where the Commission has grounds under sections 170LT or 170LU to refuse to certify an agreement, other than refusing to certify the agreement. These options ensure that those who made the agreement are given the opportunity to rectify any problem, rather than certification simply being refused, and the agreement having to be remade. 9.107 Under paragraph (1)(a), the Commission may accept an undertaking about the operation of the agreement from one or more of the persons who made the agreement. If satisfied that its concerns are met, the Commission may certify the agreement.” [49] In light of the provisions of s.190, we think that the Commissioner, on being satisfied an application for approval of the BUPA Agreement had been made under s.185 and on being concerned the BUPA Agreement did not meet the requirements set out in ss.186 and 187 because it did not pass the “no-disadvantage test”, was required to: (a) give BUPA the opportunity to give a written undertaking aimed at meeting that concern; (b) consider whether any written undertaking proffered by BUPA met the requirements relating to the signing of undertakings prescribed by the Fair Work Regulations 2009 ; (c) seek the views of each of the bargaining representatives of which he was aware on any written undertaking proffered by BUPA which met the signing requirements in the regulations; (d) consider whether he was satisfied that Fair Work Australia accepting the written undertaking was not likely to cause financial detriment to any employee covered by the BUPA Agreement or result in substantial changes to the BUPA Agreement; (e) consider whether he was satisfied the written undertaking met his concern about the BUPA Agreement not passing the “no-disadvantage test”; and (f) then decide whether to approve the BUPA Agreement under s.186.” [10] In order to investigate my concerns and illustrate those concerns for the purpose of providing an opportunity for the applicant to provide an undertaking or undertakings, or other submissions, in support of the application for approval of the Agreement, a written report was provided to the applicant on 20 November 2012. A response was requested by 27 November 2012. As a response was not received accordingly on 28 November my Associate called the applicant’s representative, Mr Andy Hill of the Northern Territory Chamber of Commerce, and was told a response would not be provided until on or after 3 December. [11] On the 28 November the Commissioner issued Directions to Talice Security to provide a response to the analysis and provide any proposed undertakings by close of business on 4 December 2012. The content of the directions was repeated in an email to Mr Hill on 28 November. [12] On 4 December email correspondence occurred between Mr Hill and my chambers regarding a request for an extension of time to comply with the Directions issued. This resulted in the cancellation of those Directions and new Directions being issued on 4 December extending the time for a response to 21 December 2012. [13] On 27 December 2012, Mr Hill was advised that no undertakings had been received and an urgent response was required. On 28 December 2012, Mr Hill was advised that if no response was received by close of business on 14 January 2013, I would proceed to determine the application on the material currently before me. [14] On 2 January 2013, Ms Michaela Gallen of the Northern Territory Chamber of Commerce wrote to my Chambers advising that Mr Hill was on leave. Ms Gallen attached undertakings signed by Mr Walter Turnbull, Director of Talice Security Services. [15] It will be observed that the Commission has been actively providing opportunities to propose undertakings or make alternative submissions in support of the approval of the Agreement between 20 November 2012 and 14 January 2013 and complying with requests from the applicant’s representatives for appropriate extensions of time to do so. [16] It is pertinent to note in this respect that the Commission operates according to guidelines which apply to the time within which it will deal with applications for approval of enterprise agreements. Thos guidelines are published on the Commission’s website. In order to deal with the application in this matter within those guidelines it is necessary to now determine the application in light of the proposed undertakings provided by the applicant. [17] I therefore now turn to consider the approval of the Agreement with the undertakings offered by the employer. [18] I will not embark on a detailed and extensive analysis of all of the terms of the Agreement for this purpose. It is only necessary to consider the amount of remuneration payable for the hours of work which may be required or worked by employees under the terms of the Agreement and compare those with what would be payable under the terms of the Award. [19] The provisions of the Agreement in relation to hours of work are: “HOURS OF WORK 11.1 The hours of work for employees are an average of sixty (60) hours per week, plus reasonable additional hours, Monday to Sunday. 11.2 An employees’ ordinary hours will not exceed an average of one hundred and twenty (120) hours per fortnight, although the actual hours worked may vary from week to week. 11.3 The minimum ordinary hour’s engagement shall not be less than two (2) and shall not exceed twelve (12) hours in any one day and not be in excess of five (5) days in any one week, unless mutually agreed by the employee and employer in advance. 11.4 A shorter period of engagement may be negotiated to suit a particular circumstance. 11.5 Shift rosters will be published on a weekly basis and may be changes by agreement or with seven (7) days notice. 11.6 ‘Engagement’ for the purpose of this clause shall be deemed to be the period or periods for which the employer notified the employee that he or she is so required to attend on any one day. 11.7 Provided that, each period of engagement shall stand alone. 11.8 A casual employee’s period of engagement may be terminated by one hours notice prior to engagement by the employer or the employee or by payment or forfeiture of one hours pay. Flexibility to manage work life balance 11.9 Employees may negotiate particular working patterns to meet personal preferences, work and family commitments. 11.10 This flexibility is negotiated taking into consideration operational requirements as well as the individual employee needs. 11.11 Hours of work negotiated under preferred hours arrangements are paid at the ordinary rate of pay and are not subject to penalties or allowances. REASONABLE ADDITIONAL HOURS 12.1 Employees may be offered to work reasonable additional hours from time to time to complete the tasks at hand. 12.2 Any hours in excess of the employees planned ordinary hours per week or sixty (60) hours per week averaged over a twelve (12) month period, are considered reasonable additional hours. 12.3 It is not compulsory for employees to work reasonable additional hours. 12.4 All reasonable additional hours will be paid at the overtime rate of pay. 12.5 All reasonable additional hours must be approved for in advance by management. 12.6 An employee may elect to take time off in lieu of payment for additional hours worked. 12.7 Any hours above or outside the ordinary hours of work, or above the sixty (60) hours per week, or two hundred and forty (240) hours in any four (4) weeks, over a twelve (12) month period, would be considered reasonable additional hours. Reasonableness 12.8 Where necessitated by operational requirements, a manager may request an employee to work reasonable additional hours in addition to their ordinary hours. 12.9 An employee may refuse to work reasonable additional hours in circumstances where the working of such additional hours would be unreasonable having regard to: (i) any risk to the employee’s health and safety; (ii) the employee’s personal circumstances including family responsibilities; (iii) the needs of the workplace or enterprise; (iv) the notice (if any) given by the employer of the additional hours and by the employee of his or her intention to refuse it; (v) whether the additional hours are on a public holiday; (vi) the number of hours worked by the employee over the four weeks ending immediately before the request to work the additional hours; and (vii) any other relevant matter. 12.10 In determining an employee’s availability to work reasonable additional hours management will consult with individually and determine with the employee if the request is reasonable.” [20] The provisions of the Award in relation to hours of work and overtime rates, clauses 21.1 and 22.3 respectively, are set out below: “21.1 Ordinary hours and roster cycles The ordinary hours of work are 38 hours per week or, where the employer chooses to operate a roster, an average of 38 hours per week to be worked on one of the following bases at the discretion of the employer: 76 hours within a roster cycle not exceeding two weeks; 114 hours within a roster cycle not exceeding three weeks; 152 hours within a roster cycle not exceeding four weeks; or 304 hours within a roster cycle not exceeding eight weeks. The following time is ordinary working time for the purposes of this clause and must be paid for as such: crib breaks; time occupied by an employee in filling in any time record or cards or in the making of records (other than time spent checking in or out when entering or leaving the employer’s premises); time spent attending a court in the interest of the employer or any client of the employer in relation to any matter arising out of or in connection with the employee’s duties; time spent fitting the employee’s own vehicle with any equipment or markings required by the employer (in relation to which the cost of any such equipment and markings must be met by the employer) unless the installation is required by reason of the employee choosing to change vehicles within three years of an initial fitting of equipment or markings; and time spent at the direction of the employer attending training courses (other than any course undertaken by an employee in order to obtain a security licence where the employee does not already hold a security licence under licencing legislation). ... 22.3 Overtime rates Where an employee works overtime the employer must pay to the employee the ordinary time rate for the period of overtime together with a loading as follows: For overtime worked on Loading payable in addition to ordinary time rate % Monday to Friday—first 2 hours 50 Monday to Friday—thereafter 100 Saturday—first 2 hours 50 Saturday—thereafter 100 Sunday 100 Public holiday 150” [21] My first observation concerns the provision or Clause 11.11. In Bupa Care Services Pty Ltd and P & A Securities Pty Ltd as trustee for the D’Agostino Family Trust T/A Michel’s Patisserie Murwillumbah and others 2 the Full Bench of Fair Work Australia (FWA) dealt with provisions of a similar kind to the effect that what were there described as preferred hours would be treated similarly to all other hours of work for the purposes of the application of the better off over all test. [22] It seems to me that clause 11.11 provides, in the context of the provisions immediately preceding it, for employees to be not better off by reference to the terms of the Award due to the effectively unregulated hours provided for by the terms of the provisions of clause 11.9 and 11.11. Moreover, unlike the model flexibility term these provisions do not contain appropriate protections or provisions for withdrawal by an employee. [23] Perhaps, more significantly, in my view, when the core provisions of Clause 11 are considered there is a potential for employees to be significantly worse off if the Agreement were approved with the undertakings offered by the employer. [24] The employer has undertaken that hours in excess of an average of 60 per week will be paid for at double time. [25] Having regard to the provisions of clause 11.1, 11.2 and 11.3 it is appropriate to consider what the remuneration would be for an employee who works up to an average of 120 hours in fourteen days worked on any day Monday to Sunday under the terms in the Agreement and consider whether an employee would be better off under those circumstances if employed under the terms of the Award, Comparative modelling is set out below accordingly: Model A - Level 1 permanent employee starting Monday working 10 x 12 hour shifts (120 hours total) including (4 x 12 hours) weekends and half night / half day. Agreement Ordinary Rate $18.50 Award Ordinary Rate $17.60 Hours Loading weekly total Hours Loading weekly total Ordinary Time 36 100% $666.00 Ordinary Time 26 100% $457.60 Night Shift 36 121.7% $810.52 Night Shift 26 121.7% $556.90 Saturday 24 150% $666.00 Saturday 12 150% $316.80 Sunday 24 200% $888.00 Sunday 12 200% $422.40 Overtime 0 100% $0.00 Overtime 6 150% $158.40 Overtime 0 100% $0.00 Overtime 38 200% $1,337.60 $0.00 $0.00 Allowances Amount Value Allowances Amount Value Allowance $0.00 District 1 $6.70 $6.70 Total $3,030.52 Total $3,256.40 Award Total Weekly Rate $3,256.40 Agreement Total Weekly Rate $3,030.52 Percentage Difference -7.45% Model B - Level 1 permanent employee starting Monday working 10 x 12 hour shifts (120 hours total) including (2 x 12 hours) one weekend and half night / half day. Agreement Ordinary Rate $18.50 Award Ordinary Rate $17.60 Hours Loading weekly total Hours Loading weekly total Ordinary Time 60 100% $1,110.00 Ordinary Time 26 100% $457.60 Night Shift 36 121.7% $810.52 Night Shift 26 121.7% $556.90 Saturday 12 150% $333.00 Saturday 12 150% $316.80 Sunday 12 200% $444.00 Sunday 12 200% $422.40 Overtime 100% $0.00 Overtime 8 150% $211.20 Overtime 100% $0.00 Overtime 36 200% $1,267.20 $0.00 $0.00 Allowances Amount Value Allowances Amount Value Allowance $0.00 District 1 $6.70 $6.70 Allowance $0.00 Allowance 0 $0.00 Total $2,697.52 Total $3,238.80 Award Total Weekly Rate $3,238.80 Agreement Total Weekly Rate $2,697.52 Percentage Difference -20.07% Model C - Level 1 permanent employee working Monday to Friday 10 x 12 hour shifts (120 hours total), no weekends and half night / half day. Agreement Ordinary Rate $18.50 Award Ordinary Rate $17.60 Hours Loading weekly total Hours Loading weekly total Ordinary Time 60 100% $1,110.00 Ordinary Time 38 100% $668.80 Night Shift 60 121.7% $1,350.87 Night Shift 38 121.7% $813.93 overtime 0 150% $0.00 overtime 8 150% $211.20 overtime 0 200% $0.00 overtime 36 200% $1,267.20 Allowances Value Allowances Amount Value Allowance $0.00 District 1 $6.70 $6.70 Allowance $0.00 $0.00 Total $2,460.87 Total $2,967.83 Award Total Weekly Rate $2,967.83 Agreement Total Weekly Rate $2,460.87 Percentage Difference -20.60% [26] On what is before me I cannot be satisfied that each employee whose employment will be covered by the terms of the Agreement will be better off overall than if employed under the terms of the Award. [27] Moreover, I conclude that approving the Agreement with the undertakings provided by the employer would lead to financial detriment to the employees whose employment would be covered by the Agreement. [28] For these reasons the Agreement cannot be approved and the application is rejected. An order will issue accordingly. COMMISSIONER 1 [2010] FWAFB 2762 2 [2010] FWAFB 2762 . Printed by authority of the Commonwealth Government Printer <Price code C, PR533356>