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Fair Work Act 2009
s.185 - Application for approval of a single-enterprise agreement
Robjohn Enterprises Pty Ltd
(AG2013/7455)
ROBJOHN ENTERPRISE AGREEMENT 2013
Fast food industry
COMMISSIONER BULL SYDNEY, 5 SEPTEMBER 2013
Application for approval of the Robjohn Enterprise Agreement 2013 - loaded wage rate -
advance payment of annual and personal leave - NES - undertakings provided.
[1] An application has been made for approval of an enterprise agreement known as the
Robjohn Enterprise Agreement 2013 (the Agreement). The application was made pursuant to
s.185 of the Fair Work Act 2009 (the Act). The Agreement is a single-enterprise agreement.
[2] On 7 August 2013, the Commission alerted the Applicant via their legal representative
that it had a number of concerns with aspects of the Agreement. These issues concerned
clause 15 - Hours of Work and Rosters; clause 18 - Overtime; clause 32 - Payment of
Annual Leave and Personal Leave as Loaded Wage Rate and the rates of pay contained in
the Agreement.
[3] Correspondence was received from the Applicant’s legal representative on 16 August
2013.
Annual/Personal Leave as a Loaded Rate
[4] The Agreement provides at clause 32 - Annual Leave and Personal Leave as
Loaded Wage Rate payment of a loaded wage rate which includes a pro rata payment of the
entitlement to annual and personal leave. The employee continues to accrue an entitlement to
take annual and personal leave, however when such leave is taken it is unpaid.
[5] This arrangement is only to occur by agreement between the employer and employee.
Clauses 30 - Annual Leave and 31 - Personal Leave provides for the standard NES
entitlements to such leave, where the leave is taken and paid contemporaneously.
[6] The Applicant submits that in an industry where casual employment is widespread a
loaded wage rate provides a financial incentive for casual employees to convert to permanent
employment.
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DECISION
E AUSTRALIA FairWork Commission
[2013] FWCA 6685
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[7] Subclauses 30.7 - Cashing in of Annual Leave and 31.7 - Cashing in of Personal
Leave allows an employee in agreement with the employer to “cash in” such leave in
accordance with the “cashing out” provisions of the Act at s.94 and s.101 respectively.
[8] In view of the Full Bench decision in Mr Irving Warren; Hull-Moody Finishes Pty
Ltd; Mr Romano Sidotti [2011] FWAFB 6709 (Hull-Moody) where a similar clause was
found to be compliant with the Act and the Federal Court decision in Construction Forestry
Mining and Energy Union v Jeld-Wen Glass Australia Pty Ltd [2012] FCA45 (Jeld-Wen)
which has led some members of this Commission not to follow the Full Bench Hull Moody
decision. I requested the Applicant to address this issue as part of the Agreement approval
process.
[9] To that end the Applicant’s contention is that individual Commission members are
bound to follow the Hull-Moody decision, being a binding Full Bench decision. The argument
advanced was that the Jeld-Wen decision was not binding as it was not on point and the
relevant comments were obiter.
[10] There was a degree of overlap in hearing dates between the two decisions. The Hull-
Moody matter was heard on 28 September 2011 and the decision delivered on 29 November
2011. The Jeld-Wen matter was heard on 30 May 2011 and the decision of Gray J delivered
on 6 February 2012.
[11] Since the Jeld-Wen decision some members of the Commission have continued to
approve enterprise agreements where the payment for annual and personal leave is included in
a loaded wage rate and the leave is then taken unpaid (see for example [2012] FWAA 3483,
[2013] FWCA 4153 and [2013] FWCA 2249). No comment has been expressed by
Commission members when approving agreements with these terms. Whereas other members
have held such a term is contrary to the National Employment Standards (NES)i and given
their reasons.ii
[12] The payment of a loaded wage rate does not extinguish or reduce the amount payable
for accrued annual and sick leave (leave) but allows for the prepayment of leave by agreement
between the employee and employer with the entitlement to take the leave remaining. This is
to be contrasted with the ability to “cash out” leave as provided under the NES where
payment is received and the entitlement to take the leave is extinguished.
[13] When considering loadings paid in lieu of annual leave and personal leave contained
in enterprise agreements section 199 of the Act specifically provides additional protections for
school based apprentices and school based trainees. This section would appear to have no
relevance as school based apprentices and school based trainees are not covered by this
Agreement.
Jeld-Wen Decision
[14] The decision of Gray J related to whether the effect of the Fair Work (Transitional
Provisions and Consequential Amendments) Act 2009 (Transitional Act) was to incorporate
the NES into an Australian Workplace Agreement (AWA). If so, was the term in the relevant
AWA for the employee to receive an additional 1.5 hours pay each week in lieu of an
entitlement to payment for any of the 10 days sick leave if such leave was taken, “cashing
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out”. His Honour held that this arrangement amounted to “cashing out” of paid
personal/carer’s leave.
[15] The application before the Court was brought by the Construction Forestry Mining and
Energy Union (CFMEU) and was made pursuant to the civil penalty provisions of the Act as
modified by the Transitional Act. The CFMEU sought the imposition of penalties for
contraventions of provisions of the Transitional Act.
[16] As is evident, the decision did not concern the approval of an enterprise agreement or
the operation of s.186 of the Act. There was no determination as to whether an enterprise
agreement containing a loaded wage rate providing for pre-payment of leave, with the leave
being available (without pay) to be taken at some time in the future, could be approved under
s.186 of the Act.
[17] Justice Gray took the view that the term in the AWA was contrary to s.100 of the Act
which provides that such leave may not be “cashed out” except in accordance with the
cashing out terms in a modern award or enterprise agreement. If leave is taken, there is an
obligation to pay the employee at the appropriate rate, payment in advance is payment in
substitution for the entitlement or cashing out. As there was no modern award or enterprise
agreement permitting cashing out, a monetary payment could not be substituted in weekly
amounts or otherwise.iii
[18] These observations were however obiter as they were not necessary for the
determination of the application. The application for penalties was dismissed on the basis
there was no contravention as no leave was taken during the relevant period so no occasions
for payment at the time leave was taken arose.
[19] Despite the decision not dealing with the approval of an enterprise agreement under
s.186 of the Act, the obiter comments of Gray J are persuasive and should be applied by the
Commission in the absence of other binding authority.
Hull Moody Decision
[20] The decision in Hull Moodyiv deals directly with the ability of the Commission to
approve an enterprise agreement under s.186 of the Act where the agreement contains a
loaded wage rate, where leave is paid in advance and when taken no further payment is made.
[21] The majority prefaced their reasons by decision in stating that due to the previous
difficulties that Commission members had raised with similar clauses in enterprise
agreements it was necessary to provide some certainty to the issue.
[22] The majority decision held that:
“Cashing out” paid leave involves making a payment in lieu of recognising an
entitlement to paid leave. When leave is cashed out the leave is reduced by the
amount compensated for by the payment.v
There is no obligation in the NES to make payment for leave simultaneously with
the taking of leave although a delayed payment may not meet the NES
obligations.vi
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Payment in advance via a loaded wage rate, of leave available to be taken at a later
date is not “cashing out” because the entitlement to take the leave is not
extinguished.vii
[23] By applying the ratio of the Hull Moody decision, the terms in this Agreement that
provide by agreement for the payment in advance of annual leave and personal leave with
such leave still accruing and available to be taken in the future (albeit without further
payment) are not in breach of the NES provisions and thus does not provide a hurdle for the
approval of the Agreement.
Applicable Authority
[24] Irrespective of my views as I consider the relevant comments of Gray J in Jeld Wen to
be obiter I am bound by the majority decision in Hull Moody (see VP Lawler’s comments in
New Acland).viii
[25] In the Full Bench decision of Pacific Access Pty Limited v Community and Public
Sector Unionix the Full Bench stated:
“The Commissioner decided not to follow a Full Bench authority which he regarded as
binding. That was a fundamental error which deprived Pacific Access of the success which it
was entitled to in accordance with binding authority. Whilst the Commissioner made it clear
he thought the decision was wrong, he was nevertheless under a clear duty to follow it. His
failure to follow an authoritative Full Bench decision was a serious error of principle which
attracts the public interest. This alone is reason to grant leave to appeal and to quash the
directions.”
[26] In Cetin v Ripon Pty Ltd (t/as Parkview Hotel)x (Cetin) the Full Bench stated:
“Although the Commission is not, as a non-judicial body, bound by principles of stare decisis,
as a matter of policy and sound administration it has generally followed previous Full Bench
decisions relating to the issue to be determined, in the absence of cogent reasons for not doing
so.”xi
[27] In Re Dalrymple Bay Coat Terminal Pty Ltdxii a Full Bench summarised the position in
relation to single members sitting at first instance as follows:
“There is not a developed system of stare decisis in this jurisdiction. However it is clearly
desirable for members of the Commission sitting alone to adhere to Full Bench decisions
which are relevant to the matter being determined. Such a policy aids consistent decision
making which in turn provides the parties to Commission proceedings with greater certainty.”
[28] More recently in Construction, Forestry, Mining and Energy Union v Queensland
Bulk Handling Pty Ltdxiii the Full Bench confirmed the approach taken in Cetin.
[29] Based on the above, I accept the position as put by the employer that I am bound to
apply the Full Bench decision in Hull Moody.
[30] In this Agreement the employer argues that the ability to agree to a loaded wage rate
incorporating pre-payment of annual leave and sick leave will provide an incentive for its
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casual workforce to convert to permanent employment where they can receive the additional
benefit of the guarantee of regular and ongoing employment.
[31] While it can be argued that a loaded wage rate encourages employees not to take
annual leave I note that the provision for and taking of four weeks annual leave is no longer
an immutable concept. The Act via the NES provisions allows annual leave to be cashed out
indefinitely, provided a four week accrual balance is maintained. That is, an employee may
after 10 years service have taken no annual leave and have a balance of only four weeks
annual leave through the regular cashing out of the accruing entitlement allowed by the Act.
[32] In respect of annual leave, I observe that many contemporary working arrangements
may also negate the attraction for some employees to take annual leave as a form of rest and
recreation. The working of an even time roster where a day off is accrued for each day
worked, flexible working arrangements or the multiplicity of rostered day off arrangements
are some examples where time off in addition to annual leave is now available in the
workplace.
[33] The, ancillary and supplementary terms in respect of the NES entitlements which may
be included in enterprise agreementsxiv, includes an example where an employee may take
double their entitlement to annual leave at half their rate of pay. A further term that may be
included can specify when payment for annual leave must be made, indicating the payment
may not necessarily need to be contemporaneous with the taking of the leave.
Undertakings
[34] With respect to clause 15 - Hours of work and rosters, and in particular, sub clause
15.4, the Commission notes that the sub clause allows an employee to work less than three
hours per shift, but no less than one hour per shift. The Award provides that an employer is
required to roster an employee for a minimum of three hours. The Applicant has provided an
undertaking that this subclause of the Agreement will not be applied and has no operation.
[35] With respect to clause 18 - Overtime, the clause did not appear to provide overtime
payments for part time employees unless they worked in excess of 38 hours per week or more
than 11 hours on any day. The Fast Food Industry Award 2010 (the Award) being the
relevant modern award for the purpose of the better off overall test, provides at the time of
being employed, part time employees will agree on a regular pattern of work specifying the
number of hours, days, start and finish times, with overtime payments for hours in excess of
the agreed hours. An undertaking has been provided by the Applicant to insert a new sub
clause 18.2(c) that provides overtime hours for part time employees as hours worked outside
the employee’s rostered hours of work.
[36] With respect to the minimum wage schedule of the Agreement, following concerns
from the Commission in relation to the rates of pay, the Applicant has provided an analysis of
wage options modelling a number of indicative rosters to show that employees are better off
overall. In addition to the modelling the Applicant has provided an undertaking that increases
all of the minimum wage rates in the Agreement. This schedule of wage rates replaces the
existing schedule in the Agreement.
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[37] The undertakings are not so substantial that if asked to vote again the employees
would not approve the Agreement. I am satisfied that the undertakings do not result in
substantial change to the Agreement as per s.190(3)(b) of the Act.
[38] All undertakings are taken to be terms of the Agreement. A copy of the undertakings is
attached at Annexure A.
[39] I am satisfied that each of the requirements of ss.186, 187 and 188 as are relevant to
this application for approval have been met.
[40] The Agreement is approved. In accordance with s.54(1) the Agreement will operate
from 12 September 2013. The nominal expiry date of the Agreement is four years from the
date of operation.
COMMISSIONER
SEAL OF FAIR WORK THE COMMISSION
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Annexure A
... Section 185 application by Robjohn Enterprises Pty Ltd for approval of the Robjohn Enterprise Agreement 2013 (AG2013/7455) Undertakings of the Applicant The Applicant undertakes that: 1) A new clause 18.2(c) of the Agreement shall be inserted: a) "For a Part Time Employee, outside of the Employee's Rostered Hours of Work." 2) Clause 15.4 of the Agreement will not be applied. 3) New minimum wage rate schedules in the Attachment will be applied. SIGNED FOR AND ON BEHALF of ROBJOHN ENTERPRISES PTY LTD: ROBERT STOJANOUSKi pellin. Director Signature 100 MINYIP ROAD 15-8-13 Date LARA 3212 Address 1300659 - 137173481
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Robjohn Enterprise Agreement 2013 - Undertaking Attachment MINIMUM WAGE RATE SCHEDULE - OPTION A Employee Hours of Work Employees paid in accordance with this Minimum Wage Rates Option A may perform work as follows: Applicable Wage Rate for Non- Applicable Wage Rate for Casual salaried Permanent Employees Employees All Hours of Work 100% 120% Salaried Employees may perform work within the abovementioned spread of hours. In accordance with Clause 7.1(b), a Salaried Employee's salary is paid for all hours of work. Minimum Wage Rates Ordinary Wage Loaded Wage Casual Wage Minimum Rate Rate Rate Weekly Salary Restaurant Supervisor / Manager $22.72 $25.35 $27.27 $955.00 Senior Sandwich Artist™ $22.09 $24.64 $26.50 $925.00 Sandwich Artist™ $20.85 $23.26 $25.02 $875.00 Part Time Trainee Wage Rates Minimum trainee wage rates for part time trainees undertaking all accredited training solely off the job: Ordinary Trainee Wage Rates Loaded Trainee Wage Rates Highest year of Year Year Year Highest year of Year Year Year schooling completed 10 11 12 schooling completed 10 11 12 School Leaver $10.77 $11.86 $14.13 School Leaver $12.01 $13.23 $15.76 Plus 1 year out of school $11.86 $14.13 $16.45 Plus 1 year out of school $13.23 $15.76 $18.35 Plus 2 years $14.13 $16.45 $19.14 Plus 2 years $15.76 $18.35 $21.35 Plus 3 years $16.45 $19.14 $21.90 Plus 3 years $18.35 $21.35 $24.43 Plus 4 years $19.14 $21.90 Plus 4 years $21.35 $24.43 Plus 5 or more years $21.90 Plus 5 or more years $24.43 Part time trainees undertaking all accredited training solely on the job, or partly on the job and partly off the job, may be paid the above trainee wage rates, less 20%. 1300459 - 1371734R1
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Robjohn Enterprise Agreement 2013 - Undertaking Attachment MINIMUM WAGE RATE SCHEDULE - OPTION B Employee Hours of Work Employees paid in accordance with this Minimum Wage Rates Option B may perform work as follows: Applicable Wage Rate for Non- Applicable Wage Rate for salaried Permanent Employees Casual Employees Monday to Friday 100% 120% Saturday, Sunday and Public Holiday 125% 145% Salaried Employees may perform work within the abovementioned spread of hours. In accordance with Clause 7.1(b), a Salaried Employee's salary is paid for all hours of work. Salaried Employees shall accordingly not be entitled to the penalty rates outlined above. Minimum Ordinary Wage Rates Ordinary Wage Saturday, Sunday Minimum Weekly Rate and Public Holiday Salary Restaurant Supervisor / Manager $21.24 $26.55 $955.00 Senior Sandwich Artist™ $20.64 $25.81 $925.00 Sandwich Artist™ $19.49 $24.36 $875.00 Minimum Casual Wage Rates Casual Wage Rate Saturday, Sunday and Public Holiday Restaurant Supervisor / Manager $25.49 $30.80 Senior Sandwich Artist™ $24.77 $29.93 Sandwich Artist™ $23.39 $28.26 Minimum Loaded Wage Rates Saturday, Sunday and Public Loaded Wage Rate Holiday Restaurant Supervisor / Manager $23.69 $29.00 Senior Sandwich Artist™ $23.03 $28.19 Sandwich Artist™ $21.74 $26.61 1300459 - 1371734R1
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Printed by authority of the Commonwealth Government Printer
Price code G, AE403834 PR541426
Robjohn Enterprise Agreement 2013 - Undertaking Attachment Part Time Trainee Wage Rates Note: The penalty rates outlined above shall apply in conjunction with the following part time trainee Wage Rates. Minimum trainee wage rates for part time trainees undertaking all accredited training solely off the job: Ordinary Trainee Wage Rates Loaded Trainee Wage Rates Highest year of Year Year Year Highest year of Year Year Year schooling completed 10 11 12 schooling completed 10 11 12 School Leaver $10.06 $11.09 $13.21 School Leaver $11.22 $12.37 $14.73 Plus 1 year out of school $11.09 $13.21 $15.37 Plus 1 year out of school $12.37 $14.73 $17.15 Plus 2 years $13.21 $15.37 $17.89 Plus 2 years $14.73 $17.15 $19.95 Plus 3 years $15.37 $17.89 $20.47 Plus 3 years $17.15 $19.95 $22.84 Plus 4 years $17.89 $20.47 Plus 4 years $19.95 $22.84 Plus 5 or more years $20.47 Plus 5 or more years $22.84 Part time trainees undertaking all accredited training solely on the job, or partly on the job and partly off the job, may be paid the above trainee wage rates, less 20%. 1300459 - 1371734R1
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i s.55 of the Act
ii [2013] FWC 3654 and [2013] FWC 3789
iiiAt [17-21]
iv By majority
vAt [38]
viAt [41]
vii At [42]
viii New Acland Coal Pty Ltd re New Acland Coal Enterprise Agreement 2011 [2011] FWA 9075
ix (1998) 83 IR 323
x (2003) 127 IR 205 at [48]
xi Also see Re Furnishing Industry Association of Australia (Queensland) Ltd Union of Employers [1998] Print Q9115,
xii (1996) (unreported, AIRC (FB), N0224, 20 March 1996)
xiii [2012] FWAFB 7551 at [22]
xiv s.55(4) of the Act
