1
Fair Work Act 2009
s 185 - Application for approval of a single-enterprise agreement
Beechworth Bakery Employee Co Pty Ltd T/A Beechworth Bakery
(AG2016/3647)
BEECHWORTH BAKERY EMPLOYEE CO PTY LTD ENTERPRISE
AGREEMENT 2016
DEPUTY PRESIDENT SAMS SYDNEY, 9 DECEMBER 2016
Application for approval of the Beechworth Bakery Employee Co. Pty Ltd Enterprise
Agreement 2016 – relevant reference instrument in dispute – Better Off Overall Test (BOOT)
– applicant covered by Restaurant Industry Award – some employees ‘worse off’ –
comparison with rosters – undertakings provided – Hart v Coles distinguished - Full Federal
Court judgement in SDA v Aldi – revised undertakings – Agreement satisfies all statutory
requirements – Agreement approved.
BACKGROUND
[1] This decision will determine an application filed by Beechworth Bakery Employee Co
Pty Ltd t/a Beechworth Bakery (or the ‘applicant’) on 27 June 2016, pursuant to s 185 of the
Fair Work Act 2009 (the ‘Act’). The application seeks the approval of the Fair Work
Commission (the ‘Commission’) of a single enterprise agreement to be known as the
Beechworth Bakery Employee Co Pty Ltd Enterprise Agreement 2016 (the ‘Agreement’). The
Agreement is to cover 232 employees employed at six sites, primarily in Victoria
(Beechworth, Echuca, Albury (NSW), Healesville, Bendigo and Ballarat) who are engaged in
front of house service (hospitality), production of bakery products (baking), transport
(logistics) and clerks (clerical). The Agreement does not cover managerial employees. For the
purposes of 186(3), I am satisfied that the group of employees to be covered by the
Agreement was fairly chosen. I note the Agreement will replace an expired collective
[2016] FWCA 8862 [Note: This decision and the associated agreement has
been quashed – refer to the Full Bench decision dated 6 April 2017 [[2017]
FWCFB 1664]
DECISION
E AUSTRALIA FairWork Commission
https://www.fwc.gov.au/documents/decisionssigned/html/2017fwcfb1664.htm
https://www.fwc.gov.au/documents/decisionssigned/html/2017fwcfb1664.htm
[2016] FWCA 8862
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agreement – The Beechworth Bakery Employee Co. Pty Ltd Employee Collective Agreement
2008.
[2] The Agreement was negotiated with the Shop, Distributive and Allied Employees
Association (‘SDA’ or the ‘Union’) and 13 employee nominated bargaining representatives,
who are representative of a cross-section of the business. The employees were issued with the
last notice of representational rights on 3 May 2016 and voting for the approval of the
Agreement commenced on 18 June 2016 and concluded on 21 June 2016. The time limits
under s 181(2) of the Act are thereby satisfied. In the vote for approval of the Agreement, 167
employees cast a valid vote in a secret ballot and 143 voted in favour of approving the
Agreement (86%). The application for approval of the Agreement was lodged on 27 June
2016, thereby satisfying thereby satisfying s 185(3) of the Act.
[3] In the form F17 accompanying the application, Mr M Matassoni¸ Managing Director
of Beechworth Bakery identified the following Awards as the relevant reference instruments
for the purposes of the Commission’s assessment of the ‘Better Off Overall Test’ (‘BOOT’),
pursuant to s 186 of the Act:
Restaurant Industry Award 2010 [MA000119]
Food, Beverage and Tobacco Manufacturing Award 2010 [MA000073]
Road Transport and Distribution Award 2010 [MA000088]
Clerks (Private Sector) Award 2010 [MA000002]
[4] Mr Matassoni attested that the higher base rates of pay under the Agreement (front of
house (2.33%-18.33%), production (0.17%-15.75%), transport (11.88%-11.96%) and clerks
(8.07%-9.74%)) resulted in the employees being ‘better off overall’, given that the Agreement
provides for the following less beneficial terms than the relevant reference instruments:
absorption of the annual leave loading into base rates;
change of Award penalty rates so as to simplify variable rates (i.e. Rate 1 and Rate 2);
standardisation of overtime loadings payable; and
a public holiday penalty rate of 200%, rather than 250%.
[5] The application for approval of the Agreement was received in my Chambers on 5
August 2016 from the Commission’s Enterprise Agreement Triage Team in Melbourne. I
listed the application for hearing by phone on 11 August, 2016 (subsequently, relisted for 15
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August 2016). Mr A Duc of Counsel was granted permission to appear, pursuant to s 596 of
the Act, with Mr Matassoni and Mr H McPherson of Broad Reach Employee Relations. Mr
M Neale appeared for the SDA with Mr T Burke, also of the SDA. The SDA had filed a form
F18, in which the Union objected to the Commission’s approval of the Agreement on the
following grounds:
The Agreement does not pass the BOOT. A comparison of the Agreement to the
relevant Awards shows that under the Agreement, employees are not ‘better off
overall’. The relevant Awards are:
(a) General Retail Industry Award 2010 [MA000004];
(b) Hospitality Industry (General) Award 2010 [MA000009];
(c) Restaurant Industry Award 2010 [MA000119]; and
(d) Food, Beverage and Tobacco Manufacturing Award 2010 [MA000073];
Some workers working early morning shifts, on Sundays and public holidays are paid
less than the Award minimums;
No Award allowances apply to the Agreement;
Casuals have no daily minimum number of hours;
17.5% annual leave loading is not paid; and
Overtime rates under the Agreement are less than under the Awards.
The SDA submitted that in light of the Full Bench decision in Hart v Coles Supermarkets
Australia Pty Ltd and Bi-Lo Pty Limited [2016] FWCB 2887 (‘Hart v Coles’), the Agreement
does not pass the BOOT when compared to the relevant Awards. Therefore, the Agreement
cannot be approved by the Commission.
[6] Given the Union’s position, the matter was adjourned by consent to 15 September
2016 to allow the parties to discuss the issues in contention. No consensus was reached. As
the SDA’s objections were pressed, the application was listed for hearing on 24 October 2016,
with directions for the filing of evidence and submissions issued by the Commission on 7
September 2016.
THE EVIDENCE
Case for the applicant
[2016] FWCA 8862
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[7] Mr Matassoni provided a statement and oral evidence. Mr Matassoni has been
involved in the business for 24 years. He described the applicant as having three main
business operating models:
two locations operated as internal wholesale bakehouses (for supply to other
internal operations) and which have baking café fronts, serving predominantly dine-
in customers, with some take away;
three locations operating as bakery cafes, with limited production, such as finishing
and decorating, serving predominantly dine-in customers, with some take away;
one location operating as a baking café, with restricted onsite production,
predominantly serving dine-in customers and some take away;
restaurant seating capacities range from 60-400 with indoor and outdoor seating and
toilet facilities for customers. The restaurants are open seven days a week with
opening and closing times ranging from 6am-7pm (peaking between 11am-2pm).
[8] Mr Matassoni said that the yearly turnover of the business is in excess of $13.5m, with
product sale statistics as follows;
pies – 23%
cakes – 20%
hot drinks – 18%
salad bar/breakfast items – 16%
cold drinks – 7%
bread/non-GST products – 7%
other – 9%
[9] It was Mr Matassoni’s estimate that 66% of the business is ‘eat in’ and 34% takeaway.
In his evidence, he provided details of the business’ menu, photographs of the production
areas and café dining areas and workers’ compensation policies, describing the business as
‘café/restaurant’. Mr Matassoni also set out the employees’ functions, duties and tasks and
training for each of the front of house, production, transport and clerical areas.
[10] In respect to the BOOT, Mr Matassoni said that the Agreement provides for terms and
conditions to be averaged across weekdays and weekends. He had undertaken an exercise of
comparing the relevant Awards’ hours and other conditions against the employees’ rosters
and was satisfied that the employees were ‘better off overall’, if the Agreement applied.
[2016] FWCA 8862
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[11] Mr Matassoni was closely questioned about the calculations he had undertaken and the
methodology adopted. He had used the Restaurant Award as the comparison and not the
Retail Award for the front of house employees. Mr Matassoni conceded there had been an
error in the original calculations, based on a rate by rate comparison which included the loss
of annual leave loading and consideration of the number of public holidays which might fall
in the roster cycle.
[12] As to items for sale, Mr Matassoni accepted that the majority of the products (bread,
pies, pasties, focaccias, wraps, sandwiches, cakes and pastries) can be taken away and are
baked and prepared onsite. However, the majority of purchased products are eaten in.
[13] Mr Matassoni said that the shift start times range from 3am-8am. He had provided
rosters for 24 employees across bakery production and front of house and said that the
modelling is similar across all locations. There are 132 part-time employees and 98 casuals.
Mr Matassoni accepted that there may be 4 or 5 employees who potentially only work on
Sundays and there is certainly one who does so currently, by choice. 17% of turnover is on
Sundays. In this case, employees who only work Sundays would be ‘worse off’, as would
hypothetically, employees who only work on public holidays (which does not happen).
However, he was unsure if work on a public holiday was voluntary.
[14] As to late and early morning shifts, Mr Matassoni said that employees are protected by
the business procedures to ensure they are not ‘worse off’. Mr Matassoni was asked about a
number of shift scenarios which he claimed do not apply because staff rotate evenly
throughout the year to share Sunday to Thursday and Tuesday to Saturday shifts. If there are
examples of employees being ‘worse off’ they are paid more than the Agreement provides for
or arrange shift swaps. Mr Matassoni said overtime is paid separately according to the
Agreement. While he conceded that accident make up pay, natural disaster leave and tea
breaks are not provided for in the Agreement, staff are allowed to take time off when they
need to, in accordance with the business policy.
[15] Mr Matassoni said that his original BOOT calculations submitted with the F17, for
both part-time and casual employees, included front of house. However, the calculations did
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not include approximately 18 Team Supervisors (3 in each location). Mr Matassoni was asked
why Supervisors appear at Level 3 and not Level 5. He did not know the answer.
[16] During Mr Matassoni’s cross-examination, the Commission raised with the parties
the possibility of undertakings, including a reconciliation provision similar to that which Bull
DP had approved in Glassons Australia Limited [2016] FWCA 5873 (‘Glassons’). Mr Duc
also sought to clarify the calculator relied upon by Beechworth. These were the first
calculations filed, and they used the Commission’s own modelling. The more recent
calculations were prepared by Mr Matassoni in relation to individuals in anticipation of a
Hart v Coles argument being advanced by the Union.
[17] In re-examination, Mr Matassoni reiterated that the predominant business activity is a
bakery/café restaurant in which the business produces its own product. It is in the restaurant
industry.
[18] Under further questioning from me, Mr Duc confirmed that the modelling provided to
the Commission took into account public holidays and annual leave loading. He maintained
that in all cases, employees are ‘better off’ under the Agreement, except if they work only on
Sunday (one person).
[19] In further cross-examination, Mr Matassoni agreed that if an employee worked only
on public holidays, they would be ‘worse off’; but that scenario simply never arises. He
agreed however, that production staff who only work shifts commencing before 6am, would
be ‘worse off’, but not all shifts start before 6am. As to meal allowances, Mr Matassoni said
that the business supplies meals to employees when they take their breaks.
SUBMISSIONS
For the applicant
[20] Counsel submitted that the Agreement meets all the statutory requirements of the Act.
In particular, that:
(i) the Agreement has been genuinely agreed to by the employees to be covered
by it;
[2016] FWCA 8862
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(ii) the group of employees was fairly chosen, and includes all the employees of
the employer, except management;
(iii) the Agreement does not contravene the National Employment Standards;
(iv) the Agreement does not contain any unlawful terms;
(v) the Agreement provides for a nominal expiry date which is four years after the
Agreement is approved; and
(vi) the Agreement contains a term for settling of disputes by the Commission and
the mandatory flexibility and consultation terms.
Relevant Reference Instrument
[21] Mr Duc submitted that the applicable Modern Award that ought to be used as the
reference instrument for the purposes of the BOOT, for front of house employees is the
Restaurant Industry Award 2010 (MA00119) (the ‘Restaurant Award’) and not the General
Retail Industry Award 2010 (MA000005) (the ‘Retail Award’), which has no application to
the applicant’s operations. He submitted that the Retail Award applies to bakery shops, where
the predominant activity is baking products for sale on the premises which are then taken
away immediately. This is not the business of the applicant. At to the applicant’s premises,
customers choose items from the menu and then remain to eat and drink those products on the
premises. Staff wait tables, serve and provide meals to customers at tables and clear tables.
This fits the definition of a café under the Restaurant Award. Mr Duc also submitted that the
relevant Award for the production employees, as well as employees who perform transport
functions is the Food, Beverage & Tobacco Manufacturing Industry Award 2010
(MA000073) (the ‘FBT Award’). The relevant Award for clerical employees is the Clerks -
Private Sector Award 2010 (MA000002) (the ‘Clerks Award’).
The Better off Overall Test (‘the BOOT’)
[22] Mr Duc accepted that the Agreement contains a single provision which is more
beneficial than the reference instruments; that is the rate of pay during the week is
significantly higher than the rate in the relevant reference instruments. No other beneficial
term or condition was identified. While Mr Duc conceded that the Agreement contains
[2016] FWCA 8862
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provisions which are less beneficial than the reference instruments, including the weekend
penalty rates, he maintained that employees working on a Saturday receive a higher penalty
rate and employees working on a Sunday receive a lower penalty rate when compared with
the reference instruments. However, when viewed against actual rosters, the Agreement
provides that employees are ‘better off overall’, when they also work during the week.
[23] Mr Duc submitted that the Union’s arguments against the Agreement passing the
BOOT should be dismissed because the Union’s calculations show that it has not interpreted
the Agreement correctly, or against the correct reference instrument. He submitted that the
structure of the Agreement is to provide a higher rate of pay Monday to Friday and an average
rate of pay for work performed on Saturdays and Sundays.
[24] Mr Duc addressed particular aspects of the Union’s submissions as follows:
(a) Shifts, Sundays and Public Holidays
while shift rates are not set out in the Agreement, payments for shift work have
been incorporated into the higher rate of pay. For example, the shift penalty of
12.5% applicable under the FBT Award has been incorporated into the rates of
pay in the Agreement;
the employees in production work on a rotating roster, which means employees
will be, on average, ‘better off overall’.
(b) Allowances
the business operates in such a way that no Award allowances are applicable,
or in the case of meal allowances, employees are provided with meals on their
breaks.
(c) Spread of hours
the spread of hours is to cover the operations of the business. Shift loadings are
paid to the employees who work from 2am in production.
(d) Hours of work
the Agreement provides for part-time minimum hours of three hours, and for a
transport employee, it is four hours.
(e) Penalty rates
the amount employees receive in penalty rates under the reference instruments
is factored into the rate of pay the employees receive on an hourly basis.
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(f) Overtime rates
the rate of overtime is 150% in the Agreement. The pattern of overtime is one
where overtime is worked in production. Overtime is paid at the higher rate, as
provided for in the Agreement.
(g) Annual leave
annual leave loading is incorporated in the higher rate of pay.
(h) Casuals
casuals receive 25% of the loaded rate of pay.
(i) Public holidays
while public holidays are paid at a lower rate than in the reference instruments,
employees are ‘better off overall’ under the Agreement.
(j) Rosters
The applicant provided rosters and calculations which Mr Duc submitted
demonstrate that the employees are better off under the Agreement than they
are under the relevant reference instruments.
[25] In oral submissions, Mr Duc informed the Commission the applicant would be
prepared to give an undertaking to provide for a reconciliation every three months, to satisfy
BOOT compliance; See: Glassons.
[26] Mr Duc reiterated that the predominant business activity of the applicant is the
cafe/restaurant industry. He relied on the definition of a café the Restaurant Award compared
to the definition of a bakery shop in the Retail Award which is - ‘bakery shops, where the
predominant activity is baking products for sale on premises’. He provided examples such as
Bakers Delight, Brumby’s Bakery, or a local Vietnamese bakery in a shopping mall or strip,
where food is purchased and taken away to be eaten elsewhere. Mr Duc said that a
commonsense approach would indicate the business is in the café/restaurant industry and the
Union had proffered no evidence to contradict this proposition. Mr Duc noted the business
also provides wholesale products to other regional bakeries and institutions in Victoria. He
also relied on the workers’ compensation definition of the business’ activities.
[27] As to the BOOT, Mr Duc highlighted that the exercise is not a ‘line by line’
comparison, but whether the employees are ‘better off overall’. Mr Burke’s ‘what if’
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questioning and ‘cherry picking’ of individuals, was not the reality of the applicant’s rostering
or employment arrangements. Mr Duc stressed that the applicant has undertaken the BOOT
analysis based on the Commission’s own calculator.
[28] Mr Duc undertook to provide an undertaking in respect to payment of drivers at the
Level 2 rate under the Road Transport Award. As to supervisors classified at Level 3 and not
Level 5, Mr Duc relied on the uncontested evidence of Mr Matassoni that the term
‘supervisor’ did not comprehend the level of duties of a Level 5 Supervisor. Mr Duc added
the term ‘Team Supervisor’ was simply an incorrect label carried over from the 2008
Agreement.
For the Union
[29] Mr Burke submitted that the Agreement does not pass the BOOT in accordance with
the Act. He relied on Hart v Coles and Integrated Protective Services Pty Ltd T/A Integrated
Protective Services [2016] FWCA 6180 (‘Integrated Protective Services’). He submitted that
in accordance with s 193 of the Act, the Agreement can only be approved if the Commission
is satisfied, as at the test time, that each Award covered employee, and each prospective
Award covered employee, would be ‘better off overall’ if the Agreement applied, rather than
if the relevant Modern Award applied. Mr Burke said that the Full Bench of the Commission
in Hart v Coles found that if individual employees were financially disadvantaged under a
proposed Agreement, then the Agreement would not pass the BOOT. Without appropriate
undertakings, the Coles Agreement could not be approved. He claimed that the same test
applies in this case. Mr Burke added that the Union had identified a large number of
employees, current and prospective, that will not be ‘better off overall’ if the Agreement
applies, rather than the relevant reference instruments. On this basis, Mr Burke submitted the
Agreement cannot be approved by the Commission.
[30] Mr Burke further submitted that if the Commission is of a mind to consider
undertakings to approve the Agreement, then those undertakings must be capable of providing
that each current and prospective employee, is ‘better off overall’ under the Agreement. Mr
Burke submitted that if there are a significant number of undertakings sought for approval,
then the Agreement will be substantially different to the one voted upon by employees and a
new vote for approval by employees must be held.
[2016] FWCA 8862
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Relevant Reference Instrument
[31] Mr Burke argued that the relevant Award to be used as a reference instrument for the
purposes of the BOOT for front of house employees is the Retail Award. He opined that the
establishments covered by the Agreement are bakery shops. These are defined under the
Award as ‘where the predominant activity is baking products for sale on the premises.’ The
Beechworth businesses prepare and sell bakery products. Mr Burke rejected the evidence of
Mr Matassoni, and submitted that the predominant activity is the baking of products for sale
to customers. While there is sometimes a clash between the Retail Award and the Restaurant
Award in relation to similar bakery establishments, if the predominant activity is the baking of
products for sale on the premises, then the Retail Award applies. In any event, Mr Burke put
that even if the applicant’s retail establishments are not covered by the Retail Award, the
Agreement still does not pass the BOOT in relation to the Awards that are claimed to be
relevant by the applicant.
The BOOT
[32] Mr Burke claimed that the only provisions of the Agreement that are more beneficial
than the relevant reference instruments, are the weekday rate of pay and the Saturday rate of
pay for some employees. He submitted that these benefits do not compensate employees for
reduced weekend penalty rates, late night penalties and other reductions in rates of pay and
conditions when compared with the reference instruments, which include the following:
reduced Sunday penalty rates;
reduced Saturday penalties for some employees;
loss of late night penalties;
reduced public holiday rates;
no annual leave loading;
no allowances;
no roster change clause;
no daily minimum starts;
reduced overtime rates.
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[33] Mr Burke believed that the rosters of individual employees, provided by the applicant,
demonstrate the financial disadvantage they would receive under the Agreement when
compared to the Award(s). This is clearly demonstrated with each part-time or casual
employee who only works on a Sunday, or early morning Monday to Friday shift workers in
production. Further, the Sunday rate and the rate for early morning shift workers in
production are lower than for each relevant Award. The public holiday rate is also lower than
the relevant Award.
[34] Mr Burke referred to the applicant’s Form F17, which stated that all employees
covered by the Agreement are either part-time or casual. This means that part-time and casual
employees may only have one start per week, which could be a Sunday or a commencement
time before 6am Monday to Friday in production each week. The same would apply for each
prospective employee. These employees will be ‘worse off’. He also said that any employee
who only works a public holiday shift in a week that a public holiday falls, is financially
‘worse off’ when compared to the relevant Award.
[35] Mr Burke made a number of observations in regard to the applicant’s BOOT
calculations which were based on sample rosters it had provided. In relation to the first group
of bakery production employees, the calculations show that 10 employees over a 16 week
period would each be $177.80 better off. However, the benefit only applies to employees if
they have a rotating roster, which includes a Saturday every fortnight. Mr Burke submitted
that the calculations do not consider the loss of annual leave loading or the reduced public
holiday rate. When these are factored in, each employee is financially ‘worse off’ under the
Agreement. He also said that a roster with a Sunday every week will also mean the employee
will be financially ‘worse off’ when compared to the Award.
[36] Mr Burke believed that a second group of production employees were shown to be
$845.12 better off over a 16 week period. However, whilst this benefit would cover the loss of
annual leave loading, it would not cover the reduction of public holiday rates. He submitted
that if one of these employees works one public holiday of 7.5 hours in the 16 week period,
then they will be financially ‘worse off’ under the Agreement. This will be compounded
where there are more public holidays in that period.
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[37] In respect to the third group of production workers, the calculations show them to be
$296.92 ‘worse off’ over a 4 month roster. This is before the loss of annual leave loading and
the reduced public holiday rate.
[38] Mr Burke submitted the following wage rate comparison for employees in production
on public holidays:
FBT Award $51.53
General Retail Award $51.53
Agreement $44.00
Reduction ($7.53)
7.5 hrs x $7.53 = ($56.48)
[39] Mr Bourke submitted that the weekly increase of $52.82 for the second group of
employees identified by Mr Matassoni, will not offset the public holiday reduction in pay if
an employee performs work on one or more public holidays for at least 7.5 hours. Therefore,
he submitted that a Monday to Friday crew, starting after 6am are financially ‘worse off’ after
working one public holiday in 16 weeks. He also said that each of the groups are financially
disadvantaged if they work more than 2 hours of overtime. He submitted that individually and
as a group, production employees are financially ‘worse off’ under the Agreement in
comparison to the relevant Award.
[40] Mr Burke submitted that the group of workers in the front of house is also financially
‘worse off’. Any employee, whether part-time or casual, who works only a Sunday is
financially ‘worse off’. At least one employee, Claudia, is shown to have worked only on a
Sunday, according the applicant’s rosters and calculations. He submitted that the employee is
financially ‘worse off’ under the Agreement by the amount of either $20.96 or $105.04 per
week. The disadvantage is greater if Claudia works on Easter Sunday at a rate of between
$8.08 and $9.40 per hour less than the relevant Award public holiday rate.
[41] Mr Burke gave a further example of disadvantage for Level 1 under the Agreement
which is the comparison of casual rates for working on the weekend. The Level 2 casual rate
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under the Restaurant Award on Saturday and Sunday is $28.37 on both days and the
Agreement rate on both days is $27.00. A casual working on a Saturday or Sunday is
therefore financially ‘worse off’ on each day in comparison to the Restaurant Award. Mr
Burke submitted that, as the applicant employs 232 part-time and casual employees, each of
them could potentially have only one shift per week on a Sunday. There are a number of
employees on the applicant’s rosters who are shown to only work a Sunday shift during that
rostered week. They are ‘worse off’ financially as a result. Mr Burke claimed that the
disadvantage is greater on any Sunday for a Level 3 casual under the reference instrument,
who receive 75% instead of the 50% that applies for Level 2. Mr Burke believed that other
front of house employees are also financially ‘worse off’, including those who work one
Sunday per roster as well as weekdays. He provided the following example:
Lorraine, works 25 hours part-time, including a Sunday.
Retail Award
20 hours x $19.44 $388.80
5 hours x $38.88 $194.40
$583.20
Restaurant Award (Level 2)
20 hours x $18.91 $378.20
5 hours x $28.37 $141.85
$520.05
Agreement (Level 1)
20 hours x $19.60 $392.00
5 hours x $25.75 $128.75
$520.75
[42] Lorraine’s loss is $62.45 against the Retail Award. This is before considering if work
is done after 6pm on a weeknight under the Award, which attracts a 25% penalty. This is
before the loss of annual leave loading or reduced public holiday rates. Mr Burke accepted
that under the Restaurant Award, the benefit is only 70 cents per week. However, he
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submitted that annual leave loading and reduced public holiday rates, including Easter Sunday
being a public holiday in both Victoria and NSW, had not been factored into the calculations.
[43] Mr Burke calculated the loss of annual leave loading for Lorraine to be $330.93 (over
a year) or $6.36 per week under the Restaurant Award. He submitted it is a higher amount
under the Retail Award, as it takes into account weekend penalties for annual leave loading.
Therefore, the 70 cents benefit each week is negated by the loss of annual leave loading.
Public holiday rates Permanent Casual
Retail Award $48.60 $53.49
Restaurant Award (Level 2) $47.28 $47.28
Agreement (Level 1) $39.20 $50.50
[44] Mr Burke submitted that there is a loss of between $8.08-$9.40 per hour for a
permanent working on a public holiday in comparison to the relevant Award. For Lorraine’s 5
hour shift on Easter Sunday, this is a minimum loss of $40.40 dollars for that day, based on
the Restaurant Award. This equates to 57.7 weeks’ worth of the 70 cent weekly benefit that
Lorraine gets every other week. If Lorraine works one public holiday, she will be financially
‘worse off’. As Lorraine works other week days, the public holiday loss is increased by the
number of public holidays that she works. In the roster provided by the applicant, Lorraine
works Monday and Tuesday, which means that she would be rostered on at least 4 more
public holidays throughout the year.
[45] Mr Burke noted that the applicant classifies Team Supervisors as Level 3 in the
Restaurant Award. This is the wrong comparison. It should be a Level 5 under the Restaurant
Award or Level 6 under the Retail Award. Mr Burke acknowledged he had not seen any
rosters for Team Supervisors. Nevertheless, he believed they would be financially ‘worse off’
under the Agreement. This was due to that group of employees receiving no compensation for
the Saturday and Sunday rates, public holiday rate or loss of annual leave loading. If they
work after 6pm on a weeknight, there is no compensation for the 25% penalty that would be
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incurred under the Retail Award. A one cent an hour increase in the Monday to Friday hourly
rate if compared to the Level 4 rate of $20.61 is not sufficient compensation for these losses
and reductions in entitlements. In addition, notwithstanding the incorrect classification, Team
Supervisors are still paid less under the Agreement than the relevant Award, if they are
properly classified as Level 3.
[46] Mr Burke submitted that clerks and drivers also need to have a Monday to Friday
roster to ensure that they are not financially disadvantaged under the Agreement. He claimed
that drivers are incorrectly classified in the applicant’s form F17. A Level 1 driver should be
classified as a Grade 2 in the Road Transport and Distribution Award 2010 (the ‘RTD
Award’). A Level 2 driver under the Agreement should be classified as a Grade 3 under the
RTD Award. Level 1 in the Agreement is paid $20.50 Monday to Friday and $26.00 on
weekends. In the RTD Award, Level 2 is paid $19.22 Monday to Friday, $28.83 on Saturday
and $38.44 on Sunday. Level 2 is paid $21.00 Monday to Friday and $27.00 on weekends. In
the RTD Award, Level 3 is paid $19.46 Monday to Friday, $29.19 on Saturday and $38.92 on
Sunday. Mr Burke further contested that the increased weekly rates in the Agreement do not
compensate for the reduced weekend rates in the Award. As well as the loss of annual leave
loading, reduced public holiday rates and reduced overtime rates, drivers are financially
‘worse off’ under the Agreement compared to the relevant Award.
[47] Mr Burke concluded that the financial disadvantages compared with the reference
instruments would be replicated in each of the applicant’s establishments and prospective
employees face the same financial disadvantage under the Agreement in comparison to the
relevant Awards.
[48] In oral submissions, Mr Burke relied on Hart v Coles and Integrated Protected
Services and calculations undertaken by the Union, to demonstrate that the Agreement fails
the BOOT. Mr Burke acknowledged that unlike in Hart v Coles, the employer in this case will
seek to offer undertakings in respect to concerns with the BOOT. He stressed that he had not
seen the form of undertaking proposed by Mr Duc.
[49] As to the relevant reference instrument, Mr Burke submitted the evidence of Mr
Matassoni and the business menu established that Beechworth makes bakery products which
are sold to customers onsite. The Retail Award covers bakery shops whose predominant
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activity is baking products for sale on the premises. Mr Matassoni’s evidence confirmed this,
particularly in that at least 50% of the products are bakery products (23% pies, 20% cakes and
7% bread). Mr Burke contended that the fact Beechworth provided seating for customers is
incidental to the predominant purpose test. Nevertheless, Mr Burke accepted that, there are
sometimes coverage ‘clashes’ between the Retail Award and the Restaurant Award in respect
to bakery establishments. In any event, neither Award comparison satisfies the BOOT.
[50] Mr Burke said that the higher rates of pay do not compensate employees for the loss of
other Award terms and conditions. Even the applicant’s rosters demonstrate employees suffer
financial disadvantage in particular circumstances; work on weekends and public holidays
particularly, and the loss of annual leave loading. He referred to his various calculations set
out in the SDA’s written submissions.
[51] Mr Burke reaffirmed the Union’s view that the common sense definition of
‘supervisor’ means that Supervisors under the Agreement should be classified as Level 5 and
not Level 3. The employees are a group of 18 senior employees. Other employees in the front
of house would look up to them as their direct supervisors, not just assisting them. Mr Burke
noted that the applicant would offer an undertaking in respect to the three drivers who are
disadvantaged under the Agreement.
[52] Mr Burke referred to the exercise undertaken by the Full Bench in Hart v Coles and
noted that it was similar to what Beechworth had undertaken - but on a much smaller scale. It
produced the result of employees being ‘worse off’ if the higher rate of pay said to offset the
other penalties, was paid for all time worked. Mr Burke noted that unlike the Coles
Agreement, this Agreement provides for no meal breaks at all. He also referred to other
benefits under the Coles Agreement which are not provided for in this Agreement, which the
Full Bench found did not amount to any significant value. Mr Burke emphasised that in this
case, there are no other identified benefits, other than the higher loaded rate. Mr Burke opined
that, on one view, this Agreement is worse than the Coles Agreement, which had been
rejected by the Full Bench.
[53] Mr Burke contended that the decision of Gregory C in Integrated Protective Services
was also similar to this Agreement. In that case, the Commission looked at rosters and the
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effects on part-time employees, particularly in respect to the limited notice to employees of
their roster. The Commission had refused to approve the Agreement.
[54] In respect to a Glassons type reconciliation undertaking, Mr Burke put that it would
need to be specific in respect to the loss of public holiday penalties and annual leave loading,
paid extra to employees who were identified as being financially disadvantaged.
In reply
[55] Mr Duc identified five proposed undertakings in respect to;
a Glasson’s type reconciliation proposition;
the payments to employees who only work Sunday;
the payment to employees who only work on public holidays;
employees working late night shifts; and
the rates for drivers.
Mr Duc stressed this exercise was not a negotiation. The applicant is prepared to provide the
undertakings it had foreshadowed and allow the Commission to make the final decision.
CONSIDERATION
Relevant Reference Instrument
[56] The SDA submitted that the business activities of Beechworth bring it within the
scope of the Retail Award and therefore that is the relevant reference instrument for the
purposes of the BOOT. It was also claimed that in any event, the BOOT is not satisfied if the
Restaurant Award was the correct relevant reference instrument. To resolve this dispute, it is
necessary to consider the coverage and definitions in both Awards.
[57] In the Retail Award, the following definition is relevantly set out as being included
within its coverage:
‘bakery shops, where the predominant activity is baking products for sale on the
premises.’
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‘Fast Food operations’ are defined as:
‘taking orders for and/or preparation and/or sale and/or delivery of:
o meals, snacks and/or beverages, which are sold to the public primarily to
be consumed away from the point of sale; and/or
o take away foods and beverages packaged sold or served in such a
manner as to allow their being taken from the point of sale to be consumed
elsewhere should the customer so decide; and/or
o food and/or beverages in food courts and/or in shopping centres and/or
in retail complexes, excluding coffee shops, cafes, bars and restaurants
providing primarily a sit down service inside the catering establishment.’
(my emphasis)
[58] The ‘restaurant industry’ is defined in the Restaurant Award as:
‘restaurants, reception centres, night clubs, cafes and roadhouses, and includes any
tea room, café, and catering by a restaurant business.’
[59] In my view, the evidence submitted by the applicant conclusively establishes that the
predominant activity of Beechworth Bakery is as a café/restaurant business and therefore the
Restaurant Award is the relevant reference instrument for the purposes of the BOOT. This
evidence, which was not seriously impugned, includes the following:
Mr Matassoni’s statement and oral evidence, particularly his assessment that 66%
of the business revenue is derived from eat-in table service;
photographs of the production, servicing and seating areas;
other documentation, including the workers’ compensation classification of
Beechworth as a café.
[60] It seems obvious that the activities of the Beechworth business can be plainly
contrasted to bakeries, as defined in the Retail Award, such as well known names as Bakers
Delight, Brumby’s, Pie Face, Bread Top, Coffee Club and Michelle’s Patisserie. To submit
that the Beechworth business is covered by the Retail Award, is to draw a very long bow
indeed. I reject it.
[61] Accordingly, I find that the Restaurant Award is the relevant Award for the
comparison with the terms and conditions of relevant employees under this Agreement for the
purposes of the BOOT.
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20
The BOOT
[62] A major consideration as to whether the Commission can approve an agreement is a
determination that the agreement passes the ‘better off overall test’(BOOT). That requirement
is set out at s 186(2)(d) of the Act. The definition of the BOOT is set out at s 193(1) as
follows:
“193 Passing the better off overall test
When a non greenfields agreement passes the better off overall test
(1) An enterprise agreement that is not a greenfields agreement passes the better
off overall test under this section if the FWC is satisfied, as at the test time, that each
award covered employee, and each prospective award covered employee, for the
agreement would be better off overall if the agreement applied to the employee than if
the relevant modern award applied to the employee.
FWC must disregard individual flexibility arrangement
(2) If, under the flexibility term in the relevant modern award, an individual
flexibility arrangement has been agreed to by an award covered employee and his or
her employer, the FWC must disregard the individual flexibility arrangement for the
purposes of determining whether the agreement passes the better off overall test.
When a greenfields agreement passes the better off overall test
(3) A greenfields agreement passes the better off overall test under this section if
the FWC is satisfied, as at the test time, that each prospective award covered employee
for the agreement would be better off overall if the agreement applied to the employee
than if the relevant modern award applied to the employee.
Award covered employee
(4) An award covered employee for an enterprise agreement is an employee who:
(a) is covered by the agreement; and
(b) at the test time, is covered by a modern award (the relevant modern
award) that:
(i) is in operation; and
(ii) covers the employee in relation to the work that he or she is to
perform under the agreement; and
(iii) covers his or her employer.
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21
Prospective award covered employee
(5) A prospective award covered employee for an enterprise agreement is a person
who, if he or she were an employee at the test time of an employer covered by the
agreement:
(a) would be covered by the agreement; and
(b) would be covered by a modern award (the relevant modern award) that:
(i) is in operation; and
(ii) would cover the person in relation to the work that he or she
would perform under the agreement; and
(iii) covers the employer.
Test time
(6) The test time is the time the application for approval of the agreement by the
FWC was made under section 185.
FWC may assume employee better off overall in certain circumstances
(7) For the purposes of determining whether an enterprise agreement passes the
better off overall test, if a class of employees to which a particular employee belongs
would be better off if the agreement applied to that class than if the relevant modern
award applied to that class, the FWC is entitled to assume, in the absence of evidence
to the contrary, that the employee would be better off overall if the agreement applied
to the employee.”
[63] Sections 190 and 191 of the Act deal with undertakings that may be given when the
Commission has concerns that the Agreement does not meet the requirements of ss 186 and
187. These sections are as follows:
“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
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(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.”
“191 Effect of undertakings
(1) If:
(a) the FWC approves an enterprise agreement after accepting an undertaking
under subsection 190(3) in relation to the agreement; and
(b) the agreement covers a single employer;
the undertaking is taken to be a term of the agreement, as the agreement applies to
the employer.
(2) If:
(a) the FWC approves an enterprise agreement after accepting an undertaking
under subsection 190(3) in relation to the agreement; and
(b) the agreement covers 2 or more employers;
[2016] FWCA 8862
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the undertaking is taken to be a term of the agreement, as the agreement applies to
each employer that gave the undertaking.
[64] It is trite to observe that an agreement does not necessarily fail the BOOT because
employees do not receive weekend penalty rates, public holiday loadings or any other Award
term or condition. Such a simplistic test would be to adopt an incorrect approach to the
exercise of ensuring employees (and prospective employees) are ‘better off overall’ under the
Agreement, rather than the relevant reference instrument. It is not an exercise in which the
Commission ‘negotiates’ with the parties over remotely unlikely ‘what if’ scenarios about
implausible or fanciful work patterns or rosters which the employer has never utilised and
never intends to. This would be a barren and wasted exercise, perhaps of some obscure
academic novelty, but of no practical utility.
[65] The BOOT is a balancing exercise - not a ‘line by line’ comparison. In NTEU v UNSW
[2010] FWAA 9588, Lawler VP said as follows:
‘It is trite to observe that awards typically contain both monetary and non-monetary
terms and conditions. Obviously enough, the BOOT calls for an overall assessment.
Comparing monetary terms and conditions is, at the end of the day, a matter of
arithmetic. There is an obvious problem of comparing apples with oranges when it
comes to including changes to non-monetary terms and conditions into the “overall”
assessment that is required by the BOOT. In such circumstances the Tribunal must
simply do its best and make what amounts to an impressionistic assessment, albeit by
taking into account any evidence about the significance to particular classes of
employees covered by the Agreement of changes to particular non-monetary
terms that render them less beneficial than the equivalent non-monetary term in
an award. In my view, it may also be relevant to consider the terms of any existing
agreement and whether there is a relevant change of position when compared to that
existing agreement.’ (my emphasis)
[66] In the present case, the assessment of the BOOT is relatively straightforward. This is
so because the Agreement does not provide any other terms or conditions which are more
beneficial than the reference instrument, other than the higher loaded rates of pay which apply
for ordinary time worked during the week and on the weekend and public holidays.
[67] In my judgement, the decision of the Full Bench of the Commission in Hart v Coles
has no application to this matter, for one significant reason. In Hart v Coles, the employer was
invited, but refused, to provide undertakings, under s 190 of the Act, to address the identified
concerns with the BOOT. By refusing to do so, the decision of the Commission not to
[2016] FWCA 8862
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approve the Agreement, was hardly surprising. That is not the position here. Beechworth has
conceded a number of individual circumstances (mostly unlikely, given the rostering and
employment arrangements of the business) which might result in a small cohort of employees
not being ‘better off overall’ under the Agreement, rather than the relevant Award. The only
identifiable real circumstance was one employee who, for purely personal reasons can only
work on Sundays, which meant she was ‘worse off’ than if the Award applied. This was
readily acknowledged and corrected, by an undertaking, that any employee who works solely
on a Sunday or public holidays (highly unlikely) would be paid at a rate to ensure they would
not be ‘worse off’ under the Agreement, compared to the relevant Modern Award. However,
for reasons I will explain later, this may not be sufficient.
[68] It cannot be ignored (for the purposes of the BOOT) that a higher base rate of pay
applies for all purposes. In other words, other terms and conditions such as annual leave,
personal and long service leave, superannuation, overtime, casual loadings etc. will all be
calculated by reference to the higher base rate, thereby making those terms more beneficial
than if they are calculated at the Award rate. In my opinion, this is an appropriate matter to be
taken into account when balancing all the relevant matters to ensure employees are ‘better off
overall’.
[69] I would add that, in some ways, the comparison between the Agreement and the
relevant Awards, at the ‘test time’ is an artificial and unreliable guide as to whether the
Agreement throughout its nominal term, will be able to guarantee all employees, (let alone
prospective employees), will be ‘better off overall’. Given the ‘test time’ is a snapshot in time;
that is, when the application to approve the Agreement is filed with the Commission
(s193(6)), it is difficult to imagine in a dynamic business environment, that rosters which exist
at the ‘test time’ will remain static and unchanged for the nominal term of the Agreement, of
up to four years. Moreover, it seems to me there would be nothing to prevent an employer
from changing rosters, subject to lawful notice, within weeks of the Agreement being lodged
and which might result in employees not being ‘better off overall’ for the balance of the
Agreement’s nominal term. Of course, an appropriate reconciliation undertaking may ensure
that this scenario is not possible under this Agreement.
The Undertakings
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[70] On 7 November 2016, Mr Matassoni provided undertakings on the following matters:
employees who only work on Sundays or public holidays will be paid the
appropriate Award penalty rate;
adjustments to provisions dealing with tradesperson’s starting times;
increasing rates of pay for drivers;
increasing rates for Team Supervisors.
[71] Pursuant to s 190(4) of the Act, each of the bargaining representatives were provided
with the applicant’s proposed undertakings. The SDA responded on 7 November 2016 and the
applicant replied the next day. I note that eight of the employee bargaining representatives
indicated they all supported the proposed undertakings.
[72] During the Commission’s deliberation of this matter, I became aware of a decision of
the Full Federal Court (by majority) in Shop, Distributive & Allied Employees Association v
ALDI Foods Pty Ltd [2016] FCAFC 161 (‘SDA v Aldi’) published on 29 November 2016,
which in my judgement squarely raises concerns with the undertakings given by Beechworth
in respect to Sunday and public holiday rates of pay and a proposed reconciliation clause.
Accordingly, on 1 December 2016, my Associate advised the parties as follows:
Dear Parties
AG2016/3647 s 185 application by Beechworth Bakery
His Honour wishes to bring to the parties’ attention this week’s majority judgment of
the Full Federal Court in SDA v Aldi [2016] FCAFC 141. The Judgement raises
concerns that the undertakings proposed by Beechworth may not ensure that all
employees are ‘better off overall’, particularly in that:
employees who only work on Sundays (one existing employee) or public
holidays will be paid the relevant Award rate, but that does not satisfy the
employee being ‘better off’; see: Aldi at paragraph 153.
His Honour is less concerned at the proposed public holiday undertaking
because of the unlikelihood of an employee only working public holidays.
However, this could be addressed by an undertaking that no employee will be
required to work only a public holiday, during a rostered cycle;
the above concerns also arise in respect to the proposed reconciliation clause
(White J calls it the ‘make good’ clause) resulting in employees being brought
into line with the Award to make up a shortfall, not being better off; see: Aldi
at 166.
The parties might consider an undertaking similar to that accepted by Gostencnik DP,
in Main People [2015] FWCA 8917 [paragraphs 5 to 8] or an undertaking ensuring
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26
that all employees will be required to work a certain number of shifts in ordinary
hours Monday to Friday.
His Honour notes that because the loaded base rate applies to all forms of leave,
superannuation, overtime etc. this may be sufficient to ensure that employees are
‘better off overall’. This could also be sufficient for casual employees whose casual
loading is calculated on this higher loaded rate.
His Honour emphasises that these comments do not indicate the Commission’s final
conclusions as to the approval of the Agreement. However, while His Honour regrets
these circumstances, he believes it incumbent on him to bring the Aldi decision to the
parties’ attention and invite further undertakings and/or submissions.
[73] Beechworth provided new undertakings, which in essence increased relevant Award
rates for work only performed on a Sunday or public holiday by 1.5%, and ensured any
reconciliation exercise, which resulted in an employee not being ‘better off overall’, be paid
any shortfall of the Award rates otherwise payable, plus 1.5%. Pursuant to 190(4) of the Act,
each of the bargaining representatives were provided with the applicant’s revised
undertakings. The SDA responded on 6 December 2016. It maintained its opposition to the
Commission approving the Agreement on the basis the revised undertakings do not satisfy the
BOOT and the revised undertakings are inconsistent with the decision in SDA v Aldi.
[74] Having considered these undertakings, the Union’s response, the fact the higher base
rates of pay are applied for ‘all purposes’; see paragraph 68, and that the vast majority of
employees work regular Monday to Friday shifts at the higher rate of pay, I am satisfied the
Agreement meets the BOOT. I do not intend to engage with the parties any further over
illogical or fanciful ‘what if’ scenarios concerning hypothetical work arrangements that
Beechworth has never used and has no intention of using.
[75] In respect to the Union’s main concern about work solely performed on Sundays and
public holidays, only one employee is likely to be practically and positively affected. In the
very unlikely event of other employees working only on Sundays or public holidays, they
would not be ‘worse off’ under the Agreement and will at least be ‘better off’ by 1.5%.
[76] Pursuant to s 190(2) of the Act, I am satisfied that the proposed undertakings meet the
concerns of the Commission as to the Agreement passing the BOOT. I am further satisfied,
pursuant to subsection 190(3), that the undertakings do not cause financial detriment to any
employee covered by the Agreement; indeed the contrary is the case. Given the proposed
[2016] FWCA 8862
27
undertakings provide for beneficial improvements for some of the existing employees, it
might safely be assumed that they would not object to the undertakings (noting that none of
the employee bargaining representatives, with the exception of the Union, opposed the
undertakings when they were provided the opportunity to make their views known). In any
event, I do not consider that the undertakings result in substantial changes to the Agreement
which would otherwise prevent the Agreement from being approved. I note the SDA did not
assert in its more recent submissions, that the revised undertakings result in substantial
changes to the Agreement. Pursuant to s 191 of the Act, the undertakings shall be taken to be
terms of the Agreement. A copy of these undertakings are attached to the Agreement and
marked as ‘Annexure A’.
[77] Having been satisfied that all of the statutory requirements for the approval of an
agreement have been met, the Commission must do so. Pursuant to s 53 of the Act, the
Beechworth Bakery Employee Co Pty Ltd Enterprise Agreement 2016 shall operate from 16
December 2016 and have a nominal expiry date of 9 December 2020.
DEPUTY PRESIDENT
Appearances:
Mr A Duc, of Counsel for the applicant
Mr T Burke, for the Shop, Distributive and Allied Employees Association
Hearing details:
Sydney
ORK WORK COMMISSION FAIR THE SEAL OF
[2016] FWCA 8862
28
2016
24 October
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