1
Fair Work Act 2009
s.185 - Application for approval of a single-enterprise agreement
Main People Pty Ltd
(AG2014/6270)
DEPUTY PRESIDENT ASBURY BRISBANE, 14 APRIL 2015
Application for approval of the Main People Pty Ltd Agreement 2014 - agreement remitted by
full bench for consideration of whether concerns about agreement passing the better off over
all test can be addressed by the employer giving undertakings - CFMEU seeking to be heard
in relation to approval of agreement.
Background
[1] An application has been made pursuant to s.185 of the Fair Work Act 2009 (the Act)
for approval of the Main People Pty Ltd Agreement 2014 (the Agreement).
The matter was remitted to me by a Full Bench, of which I was a member, after that Full
Bench determined to quash an earlier decision to approve the Agreement following a
successful appeal by the Communications, Electrical, Electronic, Energy, Information, Postal,
Plumbing and Allied Services Union of Australia (the CEPU) and the “Automotive, Food,
Metals, Engineering, Printing and Kindred Industries Union” known as the Australian
Manufacturing Workers’ Union (the AMWU) (the Unions).1
[2] The Full Bench in allowing the appeal found that there was insufficient material to
conclude that the Agreement passed the Better Off Overall Test (BOOT) but noted that it is
possible that concerns in relation to this matter could be overcome by the provision of a
suitable undertaking. Consistent with the Decision in BUPA Care Services2 the Full Bench
held that s. 190 of the Act requires that where the Commission has a concern that an
agreement does not meet the requirements set out in ss. 186 and 187 of the Act, the
Commission must give the employer the opportunity to provide a written undertaking aimed
at meeting those concerns.
[3] The Full Bench also rejected an argument by the Unions that the group of employees
was not fairly chosen and held that there was nothing unusual or unnecessarily untoward in a
relatively new business making an enterprise agreement early in its life with a small number
of employees with an expectation that the business will grow and a large number of
employees will be employed.
[4] On 4 December 2014 Minter Ellison Lawyers, the Applicant’s representatives,
corresponded with the Commission proposing the terms of an undertaking. That undertaking
did not fully address the issues raised by the Full Bench in the appeal, and I determined to list
the matter for hearing.
[2015] FWC 2560 [Note: An appeal pursuant to s.604 (C2015/3716) was
lodged against this decision - refer to Full Bench decision dated 13 August
2015 [[2015] FWCFB 4467] for result of appeal.]
REASONS FOR DECISION
E AUSTRALIA FairWork Commission
https://www.fwc.gov.au/documents/decisionssigned/html/2015FWCFB4467.htm
[2015] FWC 2560
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The role of the CEPU in the hearing
[5] On 12 December 2014, Hall Payne Lawyers, the representatives for the Unions,
corresponded to advise that the Unions did not consider the proposed undertaking to be
“satisfactory” and sought to be heard “upon this issue”.
[6] The Unions sought to be heard in accordance with s.590 of the Act on the basis that
they have industrial coverage of the workers who would be covered by the Agreement. The
Unions submitted that whether or not to hear a party in the Unions’ position was a matter of
discretion for the Commission.3
[7] Minter Ellison Lawyers on behalf of the Applicant employer objected to the CEPU or
AMWU being “heard” in relation to the matter. In this regard the Applicant relied upon the
decision in Construction, Forestry, Mining and Energy Union v Collinsville Coal Operations
Pty Ltd4. The objection did not extend to the Commission received and considering a written
statement from the Unions identifying their concerns in relation to the proposed undertaking.
[8] So far as is relevant to this matter, s.590 of the Act provides:
“590 Powers of the FWC to inform itself
(1) The FWC may, except as provided by this Act, inform itself in relation to any
matter before it in such manner as it considers appropriate.
(2) Without limiting subsection (1), the FWC may inform itself in the following ways:
…
(b) by inviting, subject to any terms and conditions determined by the FWC,
oral or written submissions;
…”
[9] As a preliminary issue I consider it would be appropriate to exercise my discretion in
favour of hearing submissions from the CEPU and AMWU in relation to the application for
approval of the Agreement. In particular I have taken into account that the Unions were
successful appellants in relation to the previous approval Decision, may have standing to
appeal any further decision in relation to the application for approval and have industrial
coverage of the employees who will be covered by the Agreement.
The issues for determination
[10] At the Hearing in relation to this matter Counsel for the Unions sought to press an
objection to the Agreement on the same fairly chosen ground that was dismissed by the Full
Bench. In particular, the Unions pressed the submission that this issue should be revisited on
the basis that the three employees who voted to approve the Agreement are no longer
employed by the Respondent. This factual situation was said to re-enliven discretionary
considerations in relation to the question of whether the group of employees covered by the
Agreement had been fairly chosen.
[2015] FWC 2560
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[11] I indicated that I did not intend to revisit the fairly chosen issue on the basis that it had
been determined by a Full Bench of which I was a member. I further indicated that, the fact
that the employees who initially made the Agreement had ceased employment was not a
matter that would cause me to reconsider this issue. It is to be expected that there would be
changes in the workforce who made the Agreement and the Act specifically contemplates that
an agreement can be made with a small group of employees and subsequently apply to a
larger group who were not employed when the Agreement was made. It is also the case that
the application for approval of the Agreement was initially made on 30 May 2014, and given
the type of work that the Agreement covers, it is not unusual or untoward that such a change
in the workforce would have occurred within the period since this time.
[12] I further indicated that the matter had been remitted to me by the Full Bench to
consider whether the employer could provide undertakings to address concerns about whether
the Agreement passed the BOOT. The particular concerns identified by the Full Bench were:
The Agreement covers a wide range of work across a range of different industries and
could apply to employees covered by Awards other than the Manufacturing and
Associated Industries and Occupations Award 2010 (the Metals Award) nominated by
the employer for the purposes of the BOOT including the Building and Construction
Onsite Award 2010 (the “Construction Award”) and the Electrical, Electronic and
Communications Contracting Award 2010 (the “Electrical Contracting Award”).;
There is no roster cycle or period over which ordinary hours are to be averaged; and
The Agreement does not provide for wage rates above the C10 level notwithstanding
that there is scope to employ tradespersons above that level, and those tradespersons
would be entitled to a higher rate under the relevant Award.
[13] The BOOT issues raised by the Unions are that while the wage rates in the Agreement
are in excess of the base rates in the Metals Award and the Construction Award, those rates
are not sufficient to compensate employees for the removal of allowances prescribed by the
relevant Awards and that are not provided for in the Agreement. The Unions also contend
that the Agreement provides for a flat rate inclusive of overtime, penalty rates, loadings and
allowances including annual leave loading, and there is no indication as to how these rates are
calculated for the purposes of determining whether the Agreement passes the BOOT.
[14] Following two hearings and a series of exchanges by email with the parties in which
the form of the undertaking was discussed, the employer offered an undertaking in the
following terms:
“1. This Agreement only applies to work to which the Manufacturing and Associated
Industries and Occupations Award 2010 (Metals Award) would have applied except
for the operation of this Agreement.
2. All Employees will be paid more under this Agreement than they would have been
paid under the Metals Award if it applied to the work carried out by them from time to
time.
3. This undertaking will be applied based on the classifications to which the
Employees would have been entitled if the Metals Award had applied.
[2015] FWC 2560
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4. If an Employee has the relevant skills and qualifications and is required to perform
work for Main People within the scope of a classification higher than C10 in the
Metals Award as per Schedule B of the Metals Award (if it applied to his or her
employment), Main People will ensure that the Employee will be paid at a rate that
maintains the wage relativities as reflected in Schedule B of the Metals Award on the
basis that the appropriate Award relativity will be calculated by reference to the Level
1 base rate of pay in the Agreement as follows:
5. Main People will only apply the roster cycles set out in clause 13(i) to 13(x) of the
Agreement.
6. An Employee may request a reconciliation once a year or on termination to
establish whether there is an amount which is required by this undertaking to be paid
to them.”
[15] The Unions objected to the proposed undertaking on the following grounds:
The limitation of work to which the Agreement applies (to work to which the Metals
Award applies) has the effect of substantially changing the coverage or application of
the Agreement so that, within the meaning of s. 190 of the Act the Commission cannot
be satisfied that the undertaking does not result in substantial changes to the
Agreement;
Substantial changes brought about by way of an undertaking will result in a situation
where the employer has not met its obligations to explain the terms of the Agreement
properly;
The proposed undertaking does not address financial detriment to employees because
it does not require that where employees are entitled to increased rates those rates will
be paid weekly resulting in circumstances where employees will be paid their wages
late;
The proposed undertaking in relation to classification and relativity is also a
substantial change to the Agreement; and
Clause 2 of the proposed undertaking is properly characterised as a statement of, or a
description of, effect rather than providing any certain or enforceable sum for which
an employee may sue to recover.
Metals Award Classification % of Level 1 base rate of
pay under Agreement
C10 100
C9 105
C8 110
C7 115
C6 125
C5 130
C4 135
C3 145
C2(a) 150
C2(b) 160
C1 180/210
[2015] FWC 2560
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Consideration
[16] Section 190 of the Act provides in relation to undertakings:
“190 FWC 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) the FWC has a concern that the agreement does not meet the
requirements set out in sections 186 and 187.
Approval of agreement with undertakings
(2) The FWC may approve the agreement under section 186 if the FWC is
satisfied that an undertaking accepted by the FWC under subsection (3) of this section
meets the concern.
Undertakings
(3) The FWC may only accept a written undertaking from one or more employers
covered by the agreement if the FWC 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.
FWC must seek views of bargaining representatives
(4) The FWC must not accept an undertaking under subsection (3) unless the FWC
has sought the views of each person who the FWC 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.”
[17] The Applicant submitted that the proposed undertaking would satisfy the Commission
in relation to the BOOT “in all possible circumstances”.5 The effect of the undertaking was
said to be that an employee must be better off under the Agreement than if they were entitled
to be paid under an applicable Modern Award. The Applicant referred the Commission to a
number of decisions were similar undertakings have been accepted.6
[2015] FWC 2560
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[18] The Applicant submitted that the Commission may accept the undertaking taking into
account the requirements of s.190 of the Act; specifically the undertaking will not cause
financial detriment to any employee covered by the Agreement, and it does not result in
substantial change to the Agreement. The Applicant also submitted that the undertaking does
not alter the Agreement in any way, as was suggested by the Unions.
[19] When an undertaking is offered by an employer the Commission may accept such
undertaking where it is satisfied that the effect of the undertaking is not likely to cause
financial detriment to employees. In this case I am satisfied that the effect of the undertaking
is not likely to cause financial detriment to any employee covered by the agreement. The
undertaking does not operate so as to reduce a beneficial entitlement under the Agreement
when compared to the Award.
[20] As to any substantial change in the Agreement I do not agree with the submissions on
behalf of the Unions that a substantial change results from the effect of the undertaking. In
relation to item 1 of the undertaking, the employer has at all times asserted that the work that
will be performed under the Agreement and the employees who will be performing that work
are covered by the Metals Award and are not covered by any other Award. The proposed
undertaking in relation to the coverage of the Agreement clarifies this point.
[21] Item 2 read in conjunction with item 6 entitles employees to be paid more under the
Agreement than they would have been entitled to be paid if the Metals Award applied and to
request a reconciliation once a year or on termination of employment to ensure that this is the
case. Items 3 and 4 of the undertaking operate so that an employee who would be entitled to
be classified at a level above C10 if the Metals Award applied to his or her employment, will
be paid a wage rate that is equivalent to the percentage Metals Award relativity for the
appropriate classification level, applied to the C10 rate in the Agreement.
[22] I am satisfied that the C10 rate in the Agreement, paid as it is for each hour which will
be worked, is sufficient to compensate employees for allowances and penalty rates they would
be entitled to under the Award. The undertaking to apply Award relativities to the C10 rate in
the Agreement will maintain the necessary margin to ensure that the Agreement passes the
BOOT in respect of any person who may be employed who would be entitled to be classified
above C10 under the Award. The Applicant has also addressed the other significant matter
raised by the Full Bench by stipulating the cycles over which ordinary hours can be rostered.
This will ensure that the calculation of amounts for the purposes of items 2 and 6 of the
undertaking can be properly carried out.
[23] Similar undertakings to those proffered by the employer in this case have been
accepted in any number of agreements approved by the Commission. I accept the
undertakings provided by the employer and I am satisfied that they meet the concerns in
relation to whether the Agreement passes the BOOT. I am also satisfied that the undertakings
do not cause financial detriment to any employee and that they do not result in substantial
changes to the Agreement.
[24] In relation to seeking the views of the bargaining representatives, I requested that the
employer provide the Commission with the last known addresses of those persons for this
purpose. Throughout the course of the hearing of this matter and when various versions of the
undertakings have been offered by the employer, I have caused copies of the proposed
[2015] FWC 2560
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undertakings to be sent by registered mail to those addresses with a request that the bargaining
representatives provide their views.
[25] There has been no response to that correspondence. In the circumstances I am
satisfied that the requirements of s. 140(5) have been met. The employer has provided a
signed copy of the undertaking in accordance with s. 190(5) and the Regulations. I am
otherwise satisfied that the Agreement must be approved on the basis that the requirements
for approval have been met. A separate Decision7 approving the Agreement will issue
concurrently with these Reasons.
DEPUTY PRESIDENT
Printed by authority of the Commonwealth Government Printer
Price code C, PR563058
1 Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia -
Electrical, Energy and Services Division - Queensland Divisional Branch and another v Main People Pty Ltd [2014]
FWCFB 8429.
2 BUPA Care Services v P & A Securities Pty Ltd as trustee for the D’Agostino Family Trust T/as Michel’s Patisserie
Murwillumbah and others [2010] FWAFB 2762.
3 Construction, Forestry, Mining and Energy Union v Collinsville Coal Operations Pty Ltd [2014] FWCFB 7940.
4 [2014] FWCFB 7940.
5 Submissions on behalf of the Applicant at paragraph 4.
6 See Etihad Airways re Etihad Airways PJSC Engineering Employee Agreement 2012 [2012] FWAA 1487; JBS Australia
Pty Limited [2014] FWCA 6410 and SKF Australia Pty Ltd re SKF Australia Oakleigh Storage Services Enterprise Site
Agreement 2010 [2011] FWAA 4468.
7 [2015] FWCA 1119.
WORK COMA SION AUSTRALIA THE SEAS OF FAIR
