1
Fair Work Act 2009
s.185—Enterprise agreement
AKN Pty Ltd T/A Aitkin Crane Services
(AG2014/8089)
Manufacturing and associated industries
COMMISSIONER RYAN MELBOURNE, 7 JANUARY 2015
Application for approval of the AKN Pty Ltd National Employee Services Agreement 2014.
[1] An application for approval of the AKN Pty Ltd National Employee Services
Agreement 2014 (the Agreement) was made by AKN Pty Ltd T/A Aitkin Crane Services
(AKN Pty Ltd) and was filed with the Commission on 5 November 2014.
[2] On 3 December 2014 the Fair Work Commission (the Commission) issued a
Statement, [2014] FWC 8690, in which the Commission identified a number of concerns in
relation to the contents of the Agreement. The Statement concluded with the following:
“[27] Any submissions or undertakings should be filed in the Commission by noon on
Friday 12 December 2014.”
[3] On 12 December 2014 AKN Pty Ltd filed with the Commission detailed submissions
which included a number of undertakings. The document filed with the Commission was not
signed. I have no reason to believe that AKN Pty Ltd would not have provided a signed
undertaking in accordance with the Fair Work Regulations 2009 if requested to do so by the
Commission. However, the Commission has not sought a signed undertaking from AKN Pty
Ltd given the conclusion reached by the Commission in relation to this matter.
[4] The document concluded with the following:
“Do not hesitate to contact the Company with any further queries or concerns you may
have arising out of these Submissions and undertakings.”
[5] The direction given at paragraph [27] of the Commission’s Statement was not an
invitation to engage in an ongoing dialogue. The Commission gave AKN Pty Ltd an
opportunity of presenting to the Commission the case it wanted to put in support of the
application and having received both submissions and undertakings the Commission will
determine the application.
[6] Before considering the issues raised by the Commission and the response from AKN
Pty Ltd the Commission notes that there are a number of areas where the contents of the
[2015] FWC 105 [Note: An appeal pursuant to s.604 (C2015/172) was
lodged against this decision - refer to Full Bench decision dated 15 April
2015 [[2015] FWCFB 1833] for result of appeal.]
DECISION
AUSTRALIA FairWork Commission
https://www.fwc.gov.au/documents/decisionssigned/html/2015FWCFB1833.htm
[2015] FWC 105
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Agreement provides terms and conditions of employment which are more beneficial to an
employee than is provided for by the relevant modern award. The ordinary hourly wage rates
provided for in Appendices A and B to the Agreement are significantly higher than the
corresponding wage rates in the relevant modern award.
Concerns which were addressed
[7] The Commission raised concerns about several matters where AKN Pty Ltd offered
undertakings which addressed the concerns of the Commission. These are dealt with below.
Deduction of Training Costs from Final Pay
[8] The Commission in its Statement identified its concern as follows:
“[7] Clause 16.6 provides the employer with an entitlement to deduct from the final
wages of an employee ‘a proportion of the training costs incurred by the Company’.
How does the employer contend that this is not an unreasonable deduction for the
benefit of the employer and that s.326 does not apply?”
[9] The response from AKN Pty Ltd was as follows:
“Clause 16.6 of the Agreement allows deductions to recover a proportion of skill
development training costs incurred by the Company. As above, the Regulations
provide a reasonable deduction is made in respect of the provision of goods and
services by the employer to the employee. Formal training and inductions provided at
the expense of the Company are transferrable to other employers and effectively
become the property of the employee - meaning the Company has paid for a service
which can result in a reasonable deduction.
The Company also refers to the comments of Justice Pagone in AIPA v Jetstar Airways
Pty Ltd [2014] FCA 14 where His Honour found that there was nothing inherently
unreasonable in Jetstar seeking to cover its costs by a percentage charge upon what it
had advanced for the benefit of prospective employees, and that there was nothing
inherently unreasonable on the percentage being 10% (of a total cost of $36,000). It
submits that this Agreement is analogous to that case when you consider the
limitations on the proposed recovery as set out in sub-clause 16.6 iii. However; to
meet the Commission’s concern, the Company will undertake that the deduction from
an employee’s final payment in clause 16.6 will only be applied where the employee
authorises the deduction.”
Consideration
[10] The Commission disagrees with the contentions of AKN Pty Ltd but does not need to
deal with the contentions given that AKN Pty Ltd has offered an undertaking which addresses
the concerns of the Commission.
Restraint of trade
[11] The Commission in its Statement identified its concern as follows:
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“[17] Clause 18.7 contains a restraint of trade provision in the following terms:
‘18.7 Employees agree that during the course of their employment they will
not, without prior written consent of the Company, enter the service of,
or be employed in any capacity for any purpose whatsoever, by any
person, firm or company; or will not be engaged or interested in any
undertaking or carrying on business; of a similar nature or competing
with the Company.’
[18] Given that there is no equivalent provision in any of the three relevant awards
and given that casual employees employed by the employer have no guarantee of
employment with the employer and given that part time employees are only employed
for part of the working week with the employer how does the employer contend that
the Agreement passes the BOOT?”
[12] The response from AKN Pty Ltd was as follows:
“Restraint of Trade
Clause 18.7 refers to employees agreeing not to enter the service of, or be employed in
any capacity by, another person or company of a similar nature or competing with the
Company – WHILST they are still employed by the Company; i.e. it is an exclusive
service commitment during their engagement by the Company. However; the intent of
the clause is not to limit employment opportunities for any part time or casual
employees. Accordingly; the Company will give an undertaking that clause 18.7 will
not apply to part time or casual employees covered by the Agreement.
Further; the Company will undertake not to unreasonably withhold consent for any full
time employee wishing to gain additional (outside) employment, and the Company
will also undertake that non-compliance by an employee with the provisions in clause
18.7 will not be treated by the Company as a contravention of a term of the Agreement
- for the purposes of section 50 of the Act, but without limitation to usual disciplinary
practices.”
National Employment Standards
[13] The Commission in its Statement identified its concern in relation to redundancy
payments as follows:
“[19] Clause 19 generally provides for redundancy but contains an exemption as
follows:
‘b) However; for the avoidance of doubt, the Company may not be obliged to
make any redundancy payment if the Company obtains suitable alternative
employment for an Employee, and the Employee unreasonably rejects that
offer of employment.’
[20] Sections 120 and 122 of the NES also deal with redundancy pay and exemptions
to paying redundancy pay.
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‘120 Variation of redundancy pay for other employment or incapacity to
pay
(1) This section applies if:
(a) an employee is entitled to be paid an amount of redundancy pay by
the employer because of section 119; and
(b) the employer:
(i) obtains other acceptable employment for the employee; or
(ii) cannot pay the amount.
(2) On application by the employer, the FWC may determine that the amount
of redundancy pay is reduced to a specified amount (which may be nil) that the
FWC considers appropriate.
(3) The amount of redundancy pay to which the employee is entitled under
section 119 is the reduced amount specified in the determination.’
‘122 Transfer of employment situations that affect the obligation to pay
redundancy pay
Transfer of employment situation in which employer may decide not to
recognise employee’s service with first employer
(1) Subsection 22(5) does not apply (for the purpose of this Subdivision) to a
transfer of employment between non-associated entities in relation to an
employee if the second employer decides not to recognise the employee’s
service with the first employer (for the purpose of this Subdivision).
Employee is not entitled to redundancy pay if service with first employer counts
as service with second employer
(2) If subsection 22(5) applies (for the purpose of this Subdivision) to a
transfer of employment in relation to an employee, the employee is not entitled
to redundancy pay under section 119 in relation to the termination of his or her
employment with the first employer.
Note: Subsection 22(5) provides that, generally, if there is a transfer of
employment, service with the first employer counts as service with the second
employer.
Employee not entitled to redundancy pay if refuses employment in certain
circumstances
(3) An employee is not entitled to redundancy pay under section 119 in
relation to the termination of his or her employment with an employer (the first
employer) if:
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(a) the employee rejects an offer of employment made by another
employer (the second employer) that:
(i) is on terms and conditions substantially similar to, and,
considered on an overall basis, no less favourable than, the
employee’s terms and conditions of employment with the first
employer immediately before the termination; and
(ii) recognises the employee’s service with the first employer, for
the purpose of this Subdivision; and
(b) had the employee accepted the offer, there would have been a
transfer of employment in relation to the employee.
(4) If the FWC is satisfied that subsection (3) operates unfairly to the
employee, the FWC may order the first employer to pay the employee a
specified amount of redundancy pay (not exceeding the amount that would be
payable but for subsection (3)) that the FWC considers appropriate. The first
employer must pay the employee that amount of redundancy pay.’
[21] It appears that clause 19(b) provides the employer with an exemption from paying
redundancy pay which may be inconsistent with the NES.
[22] It would appear that clause 19(b) may be a term that contravenes s.55 of the Act
and if so it would appear that the Agreement cannot be approved given s186(2)(c) of
the Act. Does the employer contend that clause 19(b) does not contravene s.55?”
[14] The response from AKN Pty Ltd was as follows:
“Clause 19 provides generally for redundancy. Clause 19(b) provides that the Company
may not be obliged to make any redundancy payment if the Company obtains suitable
alternative employment for an employee and the employee unreasonably rejects that
offer of employment. The intention of the Agreement is not to undermine or exclude
the NES or the Act. Accordingly; and to avoid doubt, the Company will provide a
written undertaking that it will apply the terms of clause 19 of the Agreement in a
manner not detrimental to an employee when compared to the NES.”
[15] The Commission in its Statement identified its concern in relation to the notice
requirements for personal/carers leave as follows:
“[23] Clause 21.5 provides that the employee must notify the employer when taking
personal/carers leave and is in the following terms:
‘21.5 An Employee will as soon as reasonably practicable, and before his/her
scheduled start· time, advise their direct Supervisor of his/her inability to
report for duty, in order for alternative arrangements to be made to ensure
that operations continue. The Employee should as far as practicable state
the nature of the injury or illness and the estimated duration of absence.’
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[24] Section 107 of the Act deals with the notice and evidence requirements for
personal/carers leave. Section 107(5) permits an enterprise agreement to contain
‘terms relating to the kind of evidence that an employee must provide in order to be
entitled to paid personal/carers leave’. However, there is nothing in s.107 which
permits an enterprise agreement to contain terms relating to the notice that an
employee must give an employer. Section 55(4) permits an enterprise agreement to
contain terms that are ancillary or incidental to the operation of an NES entitlement
‘but only to the extent that the effect of those terms is not detrimental to an employee
in any respect, when compared to the NES’.
[25] How does the employer contend that the above provision of clause 9.3.2 is
permitted to be in an enterprise agreement?”
[16] The response from AKN Pty Ltd was as follows:
“Clause 21.5 provides for notification requirements when an employee is taking
personal/carers leave. The Company is unsure which clause 9.3.2 the Commission is
referring to, but in any event, the Company will undertake to comply with the NES, in
particular sections 107 (1) and (2) of the Act.”
Consideration
[17] The Commission notes that the reference to clause 9.3.2 appearing in paragraph [25]
of the Commission’s Statement was clearly incorrect and potentially confusing to AKN Pty
Ltd. The reference should have been to clause 21.5. However the undertaking offered by
AKN Pty Ltd addresses the Commission’s concern in that the effect of the undertaking is that
the employer would not require an employee to notify the employer of a personal/carers leave
absence “before his/her scheduled start time”.
[18] The Commission in its Statement identified its concern in relation to compassionate
leave as follows:
“[26] Clause 22 provides for compassionate leave but appears to limit the
entitlement to a maximum of 2 days. The NES entitlement is for up to 2 days per
occasion. If clause 22 is intended to reflect the NES then it may be appropriate for an
undertaking to be given to make this clear”
[19] The response from AKN Pty Ltd was as follows:
“Clause 22 - as set out in the preamble, the clause is subject to the Act’s provisions for
compassionate leave. Accordingly; to make this clear, the Company will undertake to
comply with the NES in a manner not detrimental to an employee when applying this
clause.”
Concerns which were not addressed
[20] The Commission in its Statement identified its concern in relation to hours of work as
follows:
“Hours of Work
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[2] Clause 14 of the Agreement deals with Hours of Work. The clause provides for
patterns of work which appear to be significantly less beneficial to employees than the
pattern of hours of work permitted under any of the three relevant modern awards. For
example the clause permits the employer to require the employee to work ordinary
time comprising 28 consecutive days each of 12 hours. In addition the clause permits
the employer to require the employee to work reasonable additional hours “according
to a Site’s and/or the Company’s operational requirements”. As the clause also permits
the employer to average the ordinary hours worked over a 26 week period the patterns
of work specifically mentioned within the clause, e.g. 28 days on, 7 days off, would
permit the employer to repeat this cycle 3 times with each cycle requiring the
employer to work 28 consecutive days each of 12 hours.
[3] Clause 15 of the Agreement permits the employer to require an employee to
work night shift of up to 12 consecutive hours without the need to give the employee
any notice of the commencement of night shift work, or any notice of the cessation of
night shift work. The combined effect of both clauses 14 and 15 is to remove many of
the protections found in the three relevant awards in relation to hours of work and shift
work.
[4] The Commission notes that the Agreement contains rates of pay which are
higher than the award rates but the impact and operation of clauses 14 and 15 raise
significant issues as to whether the Agreement passes the Better Off Overall Test
(BOOT).
[5] How does the employer contend that the Agreement passes the BOOT?”
[21] The response from AKN Pty Ltd was as follows:
“Hours of Work
Clause 14 of the Agreement covers the hours of work. Please find attached some
example rosters with associated pay rates comparing the Agreement to the relevant
award’s base rate of pay. These rosters demonstrate that the wage rates provided for in
the Agreement are significantly higher when the relevant award rates are taken into
consideration. However; in order to deal with the Commission’s concern regarding the
averaging of hours, the Company will undertake that whilst the Agreement is in
operation the words “but not exceeding a 26 week period” in clause 14.1 will be
treated as having been deleted from the Agreement and will not be relied upon or
applied. The Company also notes that under clause 14.5, any change to work patterns
will be subject to the Company’s (and its customers’) fatigue management guidelines.
In the mining services industries in which the Company operates, these typically
require that as a minimum every 14th day of a work roster is a rest day.
Clause 15 of the Agreement provides for night shift. The attached sample roster
dealing with night shift work also shows that the wage rates provided for in the
Agreement are higher than when the relevant award rates are taken into
consideration.”
Consideration
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[22] The undertaking offered by AKN Pty Ltd does not address the concern of the
Commission.
[23] If the words “but not exceeding a 26 week period” were removed from clause 14.1 as
a result of the undertaking then the ordinary hours of work would be averaged over “the
relevant work pattern”. Clause 14.4 describes the various work patterns as follows:
“Work may be performed .in accordance with the following work patterns-
Any 5 days on, any 2 days off; or
10 days on, 4 days off; or
8 days on, 6 days off; or
14 days on, 7 days off; or
21 days on, 7 days off, or
28 days on, 7 days off, or
28 days on,’14 days off, or
any other reasonable combination as determined by the Company, or by
agreement.”
[24] The first seven dot points specify work patterns which do not cause any concern to the
Commission. However, the eighth dot point would permit the company to impose a 26 week
work pattern on employees. This would effectively neutralise any undertaking offered.
[25] Further the undertaking does nothing to address the concerns of the Commission in
relation to patterns of work which may involve lengthy periods of 12 hour shifts and the
amount of “reasonable additional hours” which employees will be required to work.
[26] AKN Pty Ltd also sought to rely upon clause 14.5 of the Agreement which provides as
follows:
“14.5 Upon engagement under this Agreement, each Employee will be notified of their
work pattern. However; the Company may change an Employee’s work pattern
with 7 days’ notice, or such earlier notice as agreed between the Company and
Employee concerned. Any change to work patterns will be subject to the
Company’s (and, where applicable, the customer’s) fatigue management
guidelines.”
[27] The “fatigue management guidelines” referred to in clause 14.5 are not part of the
Agreement nor were they presented to the Commission. The Commission cannot assume that
any “fatigue management guidelines” will operate to protect employees in relation to patterns
of work.
[28] The response from AKN Pty Ltd in relation to clause 15 does nothing to address the
Commissions concern. The response from AKN Pty Ltd makes clear that AKN Pty Ltd
considers that the higher wage rates offered by the Agreement compensate for any lack of a
specific notice period in relation to the commencement or conclusion of shift work.
[29] Whilst the level of remuneration is a significant factor in assessing the Better Off
Overall Test non monetary factors are also important. There are significant quality of life and
health and safety issues arising where AKN Pty Ltd reserves to itself the right to require
[2015] FWC 105
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employees to either start or end night shift work without a specific period of notice having
been given to the employee. The combined effect of clauses 14 and 15 of the Agreement is
that they permit AKN Pty Ltd to constantly move an employee between day work and night
shift work without any period of advance notice. The only requirement of the Agreement is
that an employee must have 10 hours off work between periods of work.
[30] Notwithstanding the higher wage rates in the Agreement as compared to the relevant
award the Commission concludes that no employee would be better off overall if employed
under the terms of this Agreement as against being employed under the terms of the relevant
modern award.
Deduction from pay
[31] The Commission in its Statement identified its concern in relation to deductions from
pay as follows:
“[6] Clause 16.5 authorises the employer to make deductions from the pay of
employees where the employer asserts that the employee has caused damage to
company property or any accommodation provided by the company. How does the
employer contend that this is not an unreasonable deduction for the benefit of the
employer and that s.326 does not apply?
. . .
[8] Clause 18.12 is as follows:
‘18.12 If an Employee:
fails to give the required period of notice; or
gives notice but leaves before the end of the notice period; or
is given notice but leaves before the end of the notice period;
the Employee will forfeit an amount to the Company equal to the total of all
amounts that, if the employment had continued until the end of the required
notice period, the Company would have become liable to pay ..’
[9] I refer the employer to the decision in Hydro Chem Pty Ltd, [2014] FWCA
5163. How does the employer argue that this provision of the Agreement is permitted
by the Act and should be retained in an approved agreement?”
[32] The response from AKN Pty Ltd was as follows:
“Deduction from pay
Clause 16.5 provides for the recovery of monies due to wilful damage an employee
may cause to Company’s property or accommodation provided by the Company.
Regulation 2.12 of the Fair Work Regulations provides that an employer can
reasonably recover costs directly incurred by the employer as a result of voluntary
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private use of particular property of the employer by an employee (whether authorised
or not). Examples given in the Regulations include costs for credit card bills, petrol or
personal calls on a mobile phone.
The Company submits that recovery of the reasonable cost of wilful damage caused to
property or accommodation falls within this Regulation. For example; where it is
found that an employee has wilfully punched a hole in, or smeared faeces on, the wall
of accommodation provided for them by the Company (whether owned by the
Company or not), the reasonable cost of repairs could be recovered under the
Agreement’s cl.16.5 - provided the terms of sub-clauses b) & c) were otherwise
complied with.
Clause 18.12 allows the employer to withhold monies where the employee has failed
to provide the required notice. This clause reflects and is almost identical to similar
provisions in all 3 reference Awards. Further, section 118 of the Act provides that an
enterprise agreement may include terms specifying a period of notice an employee
must give in order to terminate his or her employment. Section 324 of the Act permits
deductions when authorised by the employee in accordance with an enterprise
agreement permitting this clause.
Accordingly; the Company submits that if such a clause is permitted by an Award,
then there is no reasonable basis for it not to be permitted in an enterprise agreement
made pursuant to the Act and tested against the terms of the Award for the purposes of
the BOOT. That is; in circumstances where the relevant modern award’s rates of pay
are lower than under an Agreement’s, the Commission should be satisfied that each
employee will be in no less favourable a position, and more likely better off overall,
under an Agreement that otherwise applies an award term entitling the Company to
withhold from any monies due to an employee on termination (under the award of
NES) an amount not exceeding the amount the employee would have been paid in
respect of the period of notice required to be given by the employee [see for example -
clause 11.2 of Mobile Crane Hiring Award 2010 (“MCHA”)].
However; to meet the Commission’s concerns generally regarding the circumstances
that might arise permitting deductions from amounts payable to employees under the
Agreement, the Company will also undertake that non-compliance by an employee
with the provisions in clauses 16.5, 16.6 & 18.12 will not be treated by the Company
as a contravention of a term of the Agreement - for the purposes of section 50 of the
Act, but without limitation to usual disciplinary practices.”
Consideration
[33] There are two separate concerns identified by the Commission in relation to
deductions from pay and each will be considered separately.
[34] The concern identified by the Commission in relation to clause 16.5 of the Agreement
has not been addressed by the response from AKN Pty Ltd.
[35] Clause 16.5 provides as follows:
“16.5 Deductions from Employees’ Wages:
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a) In the event of an Employee being overpaid by the Company in any pay period, or
causing wilful damage to Company property or accommodation provided by the
Company, the Employee authorises the Company to make a single or multiple
deductions as varied from time-to-time from the Employee’s wages for the
purpose of recovering the overpaid wages or to pay the reasonable cost of any
damage caused.
b) This authorisation will not be valid if the deduction would result in the Employee
being paid below the Act’s minimum wage.
c) Before making any such deduction, the Company will inform the Employee in
writing of the:
i. reason for the proposed deduction;
ii. identity of the organisation or person in whose favour the proposed
deduction is to be made;
iii. amount of the proposed deduction and whether it will be a single or
multiple deduction; and
iv. dates or period during which the Company will make the proposed
deduction.”
[36] The concern of the Commission in relation to this clause is best expressed through the
example given by AKN Pty Ltd in its response.
[37] AKN Pty Ltd contend that:
“For example; where it is found that an employee has wilfully punched a hole in, or
smeared faeces on, the wall of accommodation provided for them by the Company
(whether owned by the Company or not), the reasonable cost of repairs could be
recovered under the Agreement’s cl.16.5 - provided the terms of sub-clauses b) & c)
were otherwise complied with.”
[38] The example used by AKN Pty Ltd raises the fundamental issue of establishing that
the employee has caused “wilful damage to Company property or accommodation provided
by the Company”.
[39] The language of clause 16.5 does not require that a court or tribunal be satisfied that
the employee has caused “wilful damage to Company property or accommodation provided
by the Company”. Rather the wording of clause 16.5 would appear to allow the employer to
determine whether or not the actions of the employee are “wilful” and where AKN Pty Ltd
decide that an employee has caused “wilful damage to Company property or accommodation
provided by the Company” then AKN Pty Ltd is entitled to deduct an amount of money from
the pay of the employee. In such circumstances the deduction of pay for the benefit of the
employer could not be reasonable.
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[40] Additionally the circumstances dealt with in clause 16.5 are very different from the
issues dealt with in Regulation 2.12 of the Regulation which is relied on by AKN Pty Ltd.
Regulation 2.12 deals with instances of an employee’s voluntary use of the employer’s assets.
Clause 16.5 includes instances where the employer is required to use the employer’s property
and where the employee is required to use accommodation provided by the employer.
[41] The concern of the Commission in relation to an employer giving itself the right to
deduct pay from an employee who has failed to give the required notice of termination was
put to AKN Pty Ltd through drawing the attention of AKN Pty Ltd to the decision in Hydro
Chem Pty Ltd, [2014] FWCA 5163.
[42] Repeating (with necessary changes) what was said in Hydro Chem Pty Ltd, [2014]
FWCA 5163.
[43] Clause 18.12 deals with the requirement for employees to give a period of notice if
they terminate their employment with the Company.
[44] Clause 18.12 provides that:
“If an Employee:
fails to give the required period of notice; or
gives notice but leaves before the end of the notice period; or
is given notice but leaves before the end of the notice period;
the Employee will forfeit an amount to the Company equal to the total of all amounts
that, if the employment had continued until the end of the required notice period, the
Company would have become liable to pay.”
[45] The concern with clause 18.12 is that it permits a deduction from wages in
circumstances where such a deduction may not be reasonable.
[46] Section 326(1) of the Act provides as follows:
“326 Certain terms have no effect
Unreasonable payments and deductions for benefit of employer
(1) A term of a modern award, an enterprise agreement or a contract of
employment has no effect to the extent that the term:
(a) permits, or has the effect of permitting, an employer to deduct an amount
from an amount that is payable to an employee in relation to the
performance of work; or
(b) requires, or has the effect of requiring, an employee to make a payment to
an employer or another person;
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if either of the following apply:
(c) the deduction or payment is:
(i) directly or indirectly for the benefit of the employer, or a party related
to the employer; and
(ii) unreasonable in the circumstances;
(d) if the employee is under 18—the deduction or payment is not agreed to in
writing by a parent or guardian of the employee.”
[47] I note that clause 18.12 of the agreement is similar to clause 22.2 of the Manufacturing
and Associated Industries and Occupations Award 2010 which provides that:
“22.2 Notice of termination by an employee
The notice of termination required to be given by an employee is the same as
that required of an employer except that there is no requirement on the
employee to give additional notice based on the age of the employee
concerned. If an employee fails to give the required notice the employer may
withhold from any monies due to the employee on termination under this
award or the NES, an amount not exceeding the amount the employee would
have been paid under this award in respect of the period of notice required by
this clause less any period of notice actually given by the employee.”
[48] Clause 22.2 of the Manufacturing and Associated Industries and Occupations Award
2010 has its origin in the 1984 Termination, Change and Redundancy Cases. In the second
Termination, Change and Redundancy Case,1 the Full Bench of the Australian Industrial
Relations Commission, in settling the orders to be issued to give effect to the first
Termination, Change and Redundancy Case,2 considered the issue of employee notice of
termination as follows:
“Notice of termination by employee
The decision provided that an employee should be required to give the additional
notice based on years of service but that it would not be appropriate to require
increased notice from the employee based on age.
The primary argument in relation to this part of the decision was concerned with the
question whether an employee should be liable for forfeiture only of wages held in
hand when an employee fails to give the required notice or whether other moneys in
hand might be used. The employers also sought to provide an award right for an
employer to recover any moneys due.
Both of these provisions were opposed by the ACTU. In arguing that the amount of
possible forfeiture should be limited to wages only it argued that such a restriction
would be a balance between the competing considerations of reciprocity of treatment
for employers and employees and the need not to impede the mobility of labour.
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We are prepared to provide that the employer shall have the right to withhold any
moneys with a maximum amount equal to the ordinary time rate for the period of
notice but we are not prepared to extend the award by including a provision which
would give the employer an award right to recover any moneys.
We are prepared to provide that:
5. The notice of termination required to be given by an employee shall be the same
as that required of an employer, save and except that there shall be no additional notice
based on the age of the employee concerned.
If an employee fails to give notice the employer shall have the right to withhold
moneys due to the employee with a maximum amount equal to the ordinary time rate
of pay for the period of notice.”
[49] I also note that in 1996 the Australian Industrial Relations Commission was required
by Item 49 of the Workplace Relations and Other Legislation Amendment Act 1996 to
undertake an award simplification exercise. In the Award Simplification Decision,3 the
Australian Industrial Relations Commission made no mention of the issue of employees
forfeiting an amount of wages due to a failure to give the appropriate notice of termination.4
The Award Simplification Decision simply identified that in the draft order issued by the
Commission in relation to the Hospitality Award the existing provision relating to notice of
termination by an employee was retained in the new simplified award.5 The provision in the
Hospitality Award was in identical terms to that first provided by the second TCR decision.
[50] It is not clear in any circumstance that a deduction from the final pay of an employee
pursuant to clause 18.12 of the agreement is a payment which is “directly or indirectly for the
benefit of the employer”.
[51] It is clear that the deduction from an employee’s final pay which is contemplated by
clause 18.12 is intended to penalise an employee for not giving the required notice of
termination to the employer.
[52] The deduction is premised upon the employee having breached a term of the
agreement namely the requirement to give a period of notice to the employer. It is sufficient
for the employer to allege that the employee has breached the notice of termination
requirement as it is the employer who then calculates the value of the notice not given and it
is the employer who then makes the deduction from the employee’s final pay. As the Full
Bench in the second TCR case stated the withholding is by way of a “forfeiture only of wages
held in hand when an employee fails to give the required notice”.
[53] There is no independent determination that the employee has breached a term of the
agreement and no independent determination of the amount of money to be withheld from the
employee.
[54] Given that Chapter 4 of the Act makes specific provisions for alleged breaches of an
enterprise agreement to be dealt with through appropriate court action it would appear to be
inconsistent with the specific provisions of the Act to permit an employer to impose an
effective penalty on an employee in circumstances where that function is the Court’s alone.
[2015] FWC 105
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[55] It would appear that there is a real question as to whether clauses such as clause 18.12
offend against the constitutional doctrine of separation of powers. In Luton v Lessels,6
Callinan J posed 11 questions for considering whether judicial power was being exercised by
the Child Support Registrar under the Child Support (Registration and Collection) Act 1988.
One of the questions was: “is the decision enforceable by the maker of it or by the institution
of which he or she is a member?” Callinan J at paragraph 199 answered this question as
follows:
“The scheme does make provision for a system of enforcement. But that system is
different from the system of enforcement by a court’s own officials, bailiffs and
sheriffs, acting under specific court orders authorizing various curial processes, of, for
example, forfeiture, seizure, arrest, execution and sale.”
[56] As can be seen Callinan J considered that part of judicial power was the system of
enforcement by a court’s own officials, bailiffs and sheriffs, acting under specific court orders
authorizing various curial processes including forfeiture.
[57] The very fact that the second TCR decision identified that the withholding of monies
from an employee who had not given the appropriate amount of notice of termination to their
employer amounted to a forfeiture of pay suggests strongly that the enforcement mechanism
within clause 18.12 of the Agreement is an exercise of a power which is judicial and which
can only be exercised by the Courts.
[58] The decisions in both WWF v Alexander7 and R v Kirby; ex parte Boilermakers
Society of Australia,8 have made clear the need for a separation between the two functions of
making industrial instruments such as awards and enterprise agreements and the enforcement
of the industrial instruments.9
[59] Section 324 of the Act permits deductions from an employee’s wages where the
employee consents.
“324 Permitted deductions
(1) An employer may deduct an amount from an amount payable to an employee in
accordance with subsection 323(1) if:
(a) the deduction is authorised in writing by the employee and is principally for
the employee’s benefit; or
(b) the deduction is authorised by the employee in accordance with an
enterprise agreement; or
(c) the deduction is authorised by or under a modern award or an FWC order;
or
(d) the deduction is authorised by or under a law of the Commonwealth, a State
or a Territory, or an order of a court.
Note 1: A deduction in accordance with a salary sacrifice or other arrangement,
under which an employee chooses to:
[2015] FWC 105
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(a) forgo an amount payable to the employee in relation to the performance of work;
but
(b) receive some other form of benefit or remuneration;
will be permitted if it is made in accordance with this section and the other provisions
of this Division.
Note 2: Certain terms of modern awards, enterprise agreements and contracts of
employment relating to deductions have no effect (see section 326). A deduction made
in accordance with such a term will not be authorised for the purposes of this section.
(2) An authorisation for the purposes of paragraph (1)(a):
(a) must specify the amount of the deduction; and
(b) may be withdrawn in writing by the employee at any time.
(3) Any variation in the amount of the deduction must be authorised in writing by
the employee.”
[60] As s.324(1)(b) makes clear a deduction from pay can be authorised by an employee in
accordance with an enterprise agreement. The deduction sought by clause 18.12 would be
acceptable if the employee authorises the deduction.
[61] An undertaking from the employer that clause 18.12 would only be applied where the
employee consented to the deduction would have been acceptable.
[62] In the present matter AKN Pty Ltd has chosen not to give an undertaking but rather to
argue that clause 18.12 is permitted.
[63] On the basis of the above consideration the Commission does not consider that clause
18.12 is a clause permitted by s.326.
Part-time employment
[64] The Commission in its Statement identified its concern in relation to part-time
employment as follows:
“[10] Clause 18.2 provides for part time employment as follows:
‘18.2 Part-time Employment
(a) A part-time Employee is one who is engaged to perform less than 38
hours per week on a regular basis.
(b) Subject to this sub-clause, part-time employees are entitled to equivalent
pay and conditions to those of full-time employees on a pro-rata basis.
[2015] FWC 105
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(c) The Company is required to roster a part-time employee for a minimum
of 3 consecutive hours on any shift.
(d) Part-time employees may be required to work reasonable additional
hours up to, and in excess of, 38 hours per week. Unless engaged under
Appendix B or C of this Agreement, time worked in excess of 38 hours
per week under this sub-clause will be treated as overtime and paid at the
rates prescribed in this Agreement.’
[11] The Mobile Crane Hiring Award does not permit part time employment.
[12] The provisions of clause 18.2 are significantly less beneficial to employees than
the provisions of clause 13 of the Manufacturing and Associated Industries and
Occupations Award 2010 and clause 12.4 of the Road Transport and Distribution
Award. Clause 13 of the Manufacturing Award provides as follows:
‘13. Part-time employment
13.1An employee may be engaged to work on a part-time basis involving a
regular pattern of hours which average less than 38 ordinary hours per week.
13.2 A part-time employee must be engaged for a minimum of three
consecutive hours a shift. In order to meet their personal circumstances, a part-
time employee may request and the employer may agree to an engagement for
less than the minimum of three hours.
13.3 Before commencing part-time employment, the employee and employer
must agree in writing:
(a) on the hours to be worked by the employee, the days on which they
will be worked and the commencing and finishing times for the work;
and
(b) on the classification applying to the work to be performed in
accordance with Schedule B.
13.4 The terms of the agreement in clause 13.3 may be varied by consent in
writing.
13.5 The agreement under clause 13.3 or any variation to it under clause 13.4
must be retained by the employer and a copy of the agreement and any
variation to it must be provided to the employee by the employer.
13.6 Except as otherwise provided in this award, a part-time employee must
be paid for the hours agreed on in accordance with clauses 13.3 and 13.4.
13.7 The terms of this award will apply pro rata to part-time employees on the
basis that ordinary weekly hours for full-time employees are 38.
[2015] FWC 105
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13.8 A part-time employee who is required by the employer to work in excess
of the hours agreed under clauses 13.3 and 13.4 must be paid overtime in
accordance with clause 40—Overtime.
13.9 Public holidays
(a) Where the part-time employee’s normal paid hours fall on a public
holiday prescribed in the NES and work is not performed by the employee,
such employee must not lose pay for the day.
(b) Where the part-time employee works on the public holiday, the part-time
employee must be paid in accordance with clauses 32.4(e), 36.2(f), 37.5 and
40.9.’
[13] How does the employer contend that the Agreement passes the BOOT in
relation to part time employees?”
[65] The response from AKN Pty Ltd was as follows:
“Part Time Employment
Clause 18.2 of the Agreement provides for part time employment. While the MCHA
does not expressly refer to part time employment, it does not prohibit part time
employment either. The wording used in the MCHA is that employees under that
award are employed as full-time weekly hire or casual employees. However; the
intention of the Company is to provide flexible work options for its employees to
allow more family friendly arrangements than are currently provided under the
MCHA, and by agreement between the parties. The Company does not understand,
from an objective viewpoint, how an employee would not be better off under the terms
of the Agreement if that employee agreed to work on a part-time basis and be paid at
better than award rates in accordance with the Agreement - rather than not be
employed at all if the view that the MCHA does not permit part time employment is
correct.
Further; an agreement that covered non-award employees as well as award employees
was approved by a Full Bench in Re Sunnyhaven Ltd [2012] FWAFB 9086, on the
basis that nothing in the Act prevents the making of enterprise agreements which
cover, in whole or in part, employees who are not award covered. The Company
submits that any crane operator working part-time could be considered to be non-
award covered, but that is no reason not to approve an agreement that allows for that
type of employment. The Company also notes that the part time provisions in the
Agreement are not dissimilar to those in the remaining reference instruments. The
attached document demonstrates how a part time employee under the Agreement is
better off overall than a part time employee under the reference instruments’ minimum
wage rates.
However; and to avoid doubt, the Company will undertake that it will apply the
relevant reference instruments’ provisions regarding agreement (in writing) as to the
hours to be worked, the days to be worked, the commencement and finishing terms for
[2015] FWC 105
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the work, and the classification applying to the work to be performed – before any
employee commences part-time employment.”
Consideration
[66] The Commission does not consider that the undertaking offered by AKN Pty Ltd
addresses the concerns of the Commission.
[67] AKN Pty Ltd contends that even though part-time employment is not permitted under
the Mobile Crane Hiring Award the provision of part-time employment in the Agreement is
intended by AKN Pty Ltd to “provide flexible work options for its employees to allow more
family friendly arrangements than are currently provided under the MCHA, and by agreement
between the parties.” However the very words of clause 18.2 tell against this construction.
[68] Nothing in clause 18.2 provides for an agreement to be reached between an employee
and AKN Pty Ltd in relation to part-time employment. AKN Pty Ltd can offer part-time
employment for any number of hours less than 38 per week. AKN Pty Ltd can change the
part-time employment arrangement.
[69] Further the very words of clause 18.2(d) tell against the part-time employment
provision being designed to “provide flexible work options for its employees to allow more
family friendly arrangements than are currently provided under the MCHA”. The very fact
that clause 18.2(d) “requires” employees to work up to 38 hours per week speaks volumes
against the clause being intended to provide family friendly arrangements for employees.
[70] The part-time employment provisions of clause 13 of the Manufacturing and
Associated Industries and Occupations Award 2010 and clause 12.4 of the Road Transport
and Distribution Award provide clear protections for employees and would assist employees
who want part-time employment to balance their family and work life commitments. None of
those protections are in clause 18.2.
[71] On the basis of the undertaking offered by AKN Pty Ltd to “apply the relevant
reference instruments’ provisions regarding agreement (in writing) as to the hours to be
worked, the days to be worked, the commencement and finishing terms for the work, and the
classification applying to the work to be performed – before any employee commences part-
time employment” the Commissions concern in relation to part-time employment for persons
who would otherwise be covered by either the Manufacturing and Associated Industries and
Occupations Award 2010 or the Road Transport and Distribution Award have been
addressed.
[72] The Commission notes that AKN Pty Ltd did not give an undertaking to apply the
provisions of clause 13.8 of the Manufacturing and Associated Industries and Occupations
Award 2010. However, the Commission is satisfied that the undertaking would have the effect
of providing the same entitlement as clause 13.8 of the Manufacturing and Associated
Industries and Occupations Award 2010 because of the operation of clause 14.11 of the
Agreement.
[73] The Commission has taken into account the fact that the wage rate in the Agreement is
higher than that in each of the three relevant awards.
[2015] FWC 105
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[74] However the Commission is satisfied that some part-time employees employed under
this Agreement would not be better off overall than if employed under the terms of one of the
relevant awards. The particular group of employees are employees who would otherwise be
covered by the Mobile Crane Hiring Award.
[75] It is not clear whether the undertaking offered by AKN Pty Ltd in relation to part-time
employment was intended to provide any benefits for employees who would otherwise be
covered by the Mobile Crane Hiring Award. Even if the undertaking operated so that
employees who would otherwise be covered by the Mobile Crane Hiring Award and who
were to be employed as part-time employees with the protections offered by clause 13 of the
Manufacturing and Associated Industries and Occupations Award 2010 that group of
employees would still not be better off overall.
[76] If AKN Pty Ltd was entitled to offer part-time employment to riggers and crane
drivers the reality would be that such part-time employees could not gain additional part-time
employment under the Mobile Crane Hiring Award as part-time employment is not a feature
of that award.
[77] The very structure of the Agreement and the wording of clause 18.2 makes clear that
AKN Pty Ltd could offer part-time employment even when a prospective employee wanted
fulltime employment. There is a considerable body of literature and statistical data on the
underemployment of part-time employees in Australia. Not all part-time employees want part-
time employment. Many part-time employees are working part-time because they cannot get
full time employment.
[78] There is nothing in the Agreement which suggests that the default types of
employment for riggers and crane drivers is either full time or casual as provided for in the
Mobile Crane Hiring Award and there is nothing in the Agreement to suggest that part-time
employment of riggers and crane drivers would only occur where a rigger or crane driver who
was either employed or had been offered employment as a full time employee specifically
sought part-time employment.
[79] The Commission is satisfied that the Agreement would fail the BOOT in relation to
part-time employees who would otherwise be covered by the Mobile Crane Hiring Award.
Casual employment
[80] The Commission in its Statement identified its concern in relation to casual
employment as follows:
“[14] Clause 18.4 deals with casual employment and contains the following provision:
(c) The starting times set out in this Agreement do not apply to casual Employees,
who may be required to start work at any time.
[15] It would appear that casual employees would not be entitled to any penalties or
loadings for working outside the ordinary hours of work set by clause 14. This would
appear to be a less beneficial provision than found in the relevant modern awards.
[2015] FWC 105
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[16] How does the employer contend that the Agreement passes the BOOT in relation
to casual employees?”
[81] The response from AKN Pty Ltd was as follows:
“Casual Employment
Clause 18.4 deals with casual employment. See attached an analysis of casual
employment under the Agreement compared to the relevant Awards. This analysis
shows that a casual employee is better off overall under the Agreement’s rates of pay.
Consideration
[82] Attached to the written submission filed by AKN Pty Ltd was a comparative table
identifying different patterns of work for different types of employment. The comparative
table for a casual employee shows that a casual employee would be better off if employed
under the Agreement. The comparative table identifies that the casual employee would
receive payment for a number of hours at the overtime rate. It is not clear from the
comparative table which specific hours are considered to be overtime hours.
[83] In the absence of an undertaking the Commission cannot be satisfied that the wage
calculations in the comparative table are actually payable under the terms of the Agreement. If
the methodology used by AKN Pty Ltd to prepare the comparative table for a casual
employee had been reduced to writing in the form of an undertaking the Commission would
have considered its concerns addressed.
Conclusion
[84] The Commission has raised a number of concerns about the contents of the
Agreement. The Commission has given AKN Pty Ltd an opportunity to address those
concerns through submissions and/or undertakings. AKN Pty Ltd has offered a number of
undertakings and made submissions in relation to various matters raised by the Commission.
[85] Whilst a number of the undertakings offered by AKN Pty Ltd addressed the concern of
the Commission some undertakings did not address the concerns of the Commission.
[86] Having considered all of the material presented and relied upon by AKN Pty Ltd and
having regard to the provisions of s.193 of the Act the Commission cannot be satisfied that
the agreement passes the better off overall test.
[87] S.186 requires that the Commission approve an enterprise agreement if certain
conditions are met. One of those conditions is that the Commission be satisfied that the
enterprise agreement passes the better off overall test. Given that the Agreement does not pass
the better off overall test the Commission must refuse to approve the Agreement.
[2015] FWC 105
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[88] The application is therefore dismissed.
COMMISSIONER
Printed by authority of the Commonwealth Government Printer
Price code C, PR559753
1 Print F7262.
2 Print F6230.
3 Print P7500, (1997) 75 IR 272.
4 (1997) 75 IR 272 at 286.
5 (1997) 75 IR 272 at 378.
6 [2002] HCA 13.
7 [1918] HCA 56.
8 [1956] HCA 10.
9 Airo-Farulla, Geoff and White, Steven, ‘Separation of Powers, ‘Traditional’ Administration and responsive Regulation”
(2004) 4 Macquarie Law Journal 57.
THE FAIR WORK COMMISSION HE SEALO
