[2023] FWCFB 169
Previously published with MNC [2023] FWCA 2868.
Associate to Deputy President Wright
Dated 21 September 2023
1
Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
Sch. 3, Item 20A(4) - Application to extend default period for agreement-based transitional
instruments
Annecto Inc
(AG2023/2321)
ANNECTO AND HEALTH SERVICES UNION OF AUSTRALIA
CERTIFIED AGREEMENT 2004-2007
Health and welfare services
DEPUTY PRESIDENT WRIGHT
DEPUTY PRESIDENT ROBERTS
DEPUTY PRESIDENT SLEVIN
SYDNEY, 23 AUGUST 2023
Application to extend the default period for the Annecto and Health Services Union of
Australia Certified Agreement 2004-2007
[1] Annecto Inc. (Annecto) has applied, pursuant to item 20A(4) of Sch 3 to the Fair
Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) (Transitional
Act), to extend the default period for the Annecto and Health Services Union of Australia
Certified Agreement 2004-2007 (Zombie Agreement). The Agreement was approved on 21
December 2004 in accordance with s.170LT of the Workplace Relations Act 1996. It is an
agreement-based transitional instrument to which item 20A applies. The Health and
Community Services Union (HACSU) (formerly the Health Services Union of Australia),
which is a party bound by the Zombie Agreement, supports the application.
[2] Item 20A of Sch 3 to the Transitional Act provides for the automatic sunsetting of
agreement-based transitional instruments by the end of the default period on 6 December
2023, subject to the capacity to apply to the Commission for an extension of the default
period for up to four years in prescribed circumstances. The main features of item 20A of Sch
3 are described in detail in the Full Bench decision in Suncoast Scaffold Pty Ltd1 and we rely
upon what is said in that decision.
[3] When an application is made under subitem (4) of item 20A of Sch 3 to the
Transitional Act the Commission is required under subitem (6) to extend the default period if
the Commission is satisfied that:
(a) Subitem (7), (8) or (9) applies and it is otherwise appropriate in the circumstances
to do so; or
(b) it is reasonable in the circumstances to do so.
[2023] FWCFB 169
DECISION
AUSTRALIA FairWork Commission
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[2023] FWCFB 169
[4] Relevantly, subitem (7) applies to an application which is made at or after the
notification time for a proposed enterprise agreement and the proposed agreement will cover
the same or substantially the same group of employees covered by the agreement-based
transitional agreement. Subitem (8) applies to an individual agreement-based transitional
instrument. Subitem (9) applies to a collective agreement-based transitional instrument where
the award covered employees, viewed as a group, would be better off overall if the instrument
applied to those employees than if the relevant modern award applied.
[5] The applicant relied upon on a statement of Saj Kethsiri, Manager - Workplace
Relations in support of its application. Relevant to subitem (7) Mr Kethsiri described
bargaining towards a proposed agreement that would cover the employees currently covered
by the Zombie Agreement. Annecto is a large not-for-profit organisation which provides aged
care and disability support services. It operates in Victoria, New South Wales, the Australian
Capital Territory and Queensland. It employs approximately 1,086 staff. Most of its staff are
in Victoria. The Zombie Agreement only applies in Victoria. In February 2019 it merged with
another Victorian disability services organisation. The employees of that organisation
continue to be covered by another enterprise agreement. Consequently, the Zombie
Agreement does not apply to all of Annecto’s employees. Mr Kethsiri estimates that it covers
around 48% of Annecto’s workforce.
[6] In April 2023, the applicant commenced discussions with employees indicating it
would be seeking an agreement with national coverage. Prior to those discussions Annecto
met with representatives of HACSU and the Australian Education Union to convey its
intention to issue Notices of Employee Representational Rights (NERR) to employees.
HACSU was not supportive of a national agreement, preferring instead a separate Victorian
Agreement. The scope of the proposed agreement is contested. NERRs were issued to
employees on 3 May 2023. There was a bargaining meeting on 29 May 2023. The employees
were represented by the two unions and two individual employees attended as individual
bargaining representatives.
[7] The issue of scope was raised early in the bargaining and is contested. What is not
contested is that a proposed agreement will cover the same employees covered by the Zombie
Agreement. Annecto presented its log of claims on 27 July 2023 and is expecting separate
logs of claims from each of the unions.
[8] Mr Kethsiri describes further complexity associated with the bargaining arising from
the merger. The employees of the disability services organisation that transferred to Annecto
are covered by their own enterprise agreement. This gives rise to administrative complexity as
well. Annecto wishes to consolidate the terms and conditions applying to its allied health staff
by bringing all of its employees, who are currently covered by different instruments, under a
single enterprise agreement. Mr Kethsiri estimates that it will take 12 to 18 months to finalise
an agreement.
[9] Annecto contends that the sunsetting of the Zombie Agreement would lead to a further
complexity as it would need to transition its staff covered by the Zombie Agreement to the
Social, Community, Home Care and Disability Support Services Industry Award 2010
(SCHADS Award) in circumstances where it hopes to then transition them to an enterprise
agreement. The complexity is associated with the payroll and rostering software that it uses to
ensure compliance with its obligations under the different instruments. A change to the
[2023] FWCFB 169
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SCHADS Award and then to a new agreement will require substantial changes to this
software twice in a relevantly short period raising logistical and cost implications.
[10] The Commission provided an analysis of the terms of the Zombie Agreement against
the SCHADS Award for the purposes of the better off overall test. The analysis showed that
that employees would not be better off overall if the Zombie Agreement remained. Mr
Kethsiri accepted this analysis but attested to a number of practices in place which are
additional to the terms of the Zombie Agreement which are beneficial to employees and
would mean that the employees would be better off overall if the current arrangements, the
Zombie Agreement and the more favourable terms, continued.
[11] In his statement Mr Kethsiri provided an undertaking that while the Zombie
Agreement continues to apply Annecto will continue to:
(a) pay all staff covered by the Zombie EA (comprising 48% of its workforce)
at least 9.77% above the applicable minimum rates prescribed in the
SCHADS Award;
(b) pay attendant care employees at 150% of their ordinary rate for working
on Saturdays;
(c) pay attendant care employees at 200% of their ordinary rate for working
on Sundays;
(d) pay staff a kilometre reimbursement of 96 cents per kilometre; and
(e) pay a minimum sleepover allowance of $80 per sleepover.
[12] Annecto submits that subitem (7) and subitem (9) apply to the applications and that it
is otherwise appropriate to extend the default period and so the Commission is required by
subitem 6(a) to grant the application. Annecto correctly points out that only one of subitems
(7) or (9) needs to be satisfied for the application to proceed under subitem 6(a).
[13] Annecto contends, in the alternative, that the Commission is required to extend the
default period under subsection 6(b) because it would be satisfied that it is reasonable in the
circumstances to do so.
[14] HACSU supports the application. In its submissions it agreed with Annecto that the
bargaining for a new enterprise agreement would be complex for the reasons outlined by
Annecto and would take some time. On the better off overall question, HACSU submitted that
the employees would be better off overall on the Zombie Agreement than the SCHADS
Award. HACSU submits that it has consulted with its members who are covered by the
Zombie Agreement and those members have expressed a desire to continue to be covered by
it until such time a replacement agreement can be negotiated. HACSU also point to the
National Review of the National Disability Insurance Scheme which is due to report in
October 2023 and the final report of the Royal Commission into Violence, Abuse, Neglect
and Exploitation of People with a Disability which is due on 29 September 2023. HACSU
submits that these reports may impact on bargaining as they are likely to contain
recommendations that will impact on funding in the disability sector.
[15] HACSU is concerned that the sunsetting of the Zombie Agreement in December 2023
will contribute to the uncertainty already associated with bargaining. It supports a two year
extension of the default period.
4
[2023] FWCFB 169
Consideration
[16] The Full Bench in ISS Health Services Pty Ltd2 described the three requirements for
subitem (7) to apply. The first is the requirement that the application is made at or after the
‘notification time’ for a proposed agreement as defined in s.173(2) of the Fair Work Act 2009
(FW Act). The second is that the proposed agreement must cover the same or substantially the
same group of employees as the Zombie Agreement. The Full Bench stated that this could be
established by comparing the NERR for the proposed agreement to the coverage clause of the
Zombie Agreement. The third is that bargaining for the proposed agreement has commenced.
[17] We are satisfied that these three requirements are met. The notification time for the
agreement is the date the NERR was issued to employees on 3 May 2023. The application
was made on 12 July 2023. The coverage of the proposed agreement described in the NERR
is broader than the coverage of the Zombie Agreement but includes the same or substantially
the same group of employees as the Zombie Agreement. Bargaining has commenced. A
bargaining meeting occurred on 29 May 2023 and there have been exchanges of claims
between the bargaining representatives.
[18] As subitem (7) is met, subitem 6(a) requires a consideration of whether it is otherwise
appropriate in the circumstances to extend the default period. In ISS Health Services, the Full
Bench considered it was appropriate to do so where the parties were seeking time to negotiate
a replacement agreement are not simply seeking to extend an agreement for the maximum
period for the sake of convenience. The Full Bench also took into account the complexity of
the negotiations due to the number of employees and work sites to be covered by the
replacement agreement. The third factor the Full Bench took into account was that while the
Zombie Agreement remained in place, the employees would be better off overall than if the
modern award applied.
[19] All three of these factors are relevant to the current case. Annecto and HACSU are
committed to negotiating a replacement agreement and need time beyond 6 December 2023 to
do so. The negotiations are complex due to the competing scope claims of the parties. The
expanded coverage sought by Annecto will require resolution, either by agreement or under
s.238 of the FW Act and may involve coverage of employees nationally and beyond the
employees covered by the Zombie Agreement. Besides the national coverage issue, HACSU’s
preference for a a more limited scope, applying to Victoria only, involves the complexity of
integrating terms and conditions currently regulated by two agreements as a consequence of
the merger referred to in Mr Kethsiri’s evidence. As to the third factor, whilst the
undertakings would not be relevant to any better off overall analysis under subitem (9), they
may be taken into account in determining whether it is otherwise appropriate to extend the
default period under subitem (6)(a)3. Given the undertakings provided in Mr Kethrisi’s
statement it is clear, and agreed between the parties, that the employees will be better off
overall if the agreement and the undertakings apply to the employees covered by the Zombie
Agreement if the default period is extended. Other factors relevant to these proceedings are
the support of HACSU for the extension, the views of the employees as expressed to their
union and the two upcoming reports that may have an impact on the funding in the disability
care sector and so may have an impact on the negotiations.
[20] Given our conclusions above it is not necessary to consider Annecto’s alternative case
under subitem (6)(b) that it is reasonable in the circumstances to extend the default period.
[2023] FWCFB 169
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[21] As we are satisfied that subitem 6(a) applies we are required to extend the default
period. As the Full Bench observed in Suncoast Scaffolding Pty Ltd4 the Commission has a
discretion as to the length of the extension, subject to the limitation that the extension cannot
be more than four years. The nature of the discretion is such that we are not bound to grant the
period of extension sought in the application.5 The extension sought by Annecto, and
supported by HACSU, is two years.
[22] In ISS Health Services Pty Ltd the Full Bench ordered an extension of 12 months in
circumstances where subitem (7) applied. The Full Bench considered this sufficient time for a
replacement agreement to be finalised. The Full Bench noted that should the parties require
assistance to finalise an agreement then s.240 of the FW Act provides access to the
Commission to resolve any disputes that arise in bargaining. The Full Bench noted that the
additional 12 months amounted to an 18 month period in which to conclude an agreement as
the NERR in that matter had been issued in June 2023.
[23] In Applications by APESMA6 the Full Bench dealt with circumstances where
bargaining had not commenced, and the employer was not proposing to commence
bargaining. The Full Bench extended the default period for a period of three years from its
decision, as it anticipated that the unions may need to apply for a majority support
determination under s.236 of the FW Act and sought to provide a reasonable amount of time
for that to occur. The order arising from that decision extended the default period to August
2026, a period of 2 years and 9 months.
[24] In this matter Mr Kethrisi’s evidence was that it would take a further 12 to 18 months
to finalise a replacement agreement. We are of the view that an extension that is longer than
the extension granted in ISS Health Pty Ltd is appropriate given the complexity associated
with bargaining for a replacement described above. We are of the view that the extension
should be shorter than the extension granted in Applications by APESMA because in that case
bargaining had not commenced and the employer was not proposing to bargain.
[25] We will therefore order an 18 month extension of the default period. We believe this
to be appropriate in all of the circumstances of this case. It should allow sufficient time for the
parties to resolve, either between themselves or with the assistance of the Commission, the
scope issue and other complexities associated with the proposed enterprise agreement.
[26] An order extending the default period for the Zombie Agreement to 6 June 2025 will
be published separately. The Agreement is published, in accordance with subitem (10A)(c), as
an Annexure to this decision.
DEPUTY PRESIDENT
OF THE FAIR WORK L MISSION THE SEA
6
[2023] FWCFB 169
Printed by authority of the Commonwealth Government Printer
AG837839 PR766492
1 [2023] FWCFB 105.
2 [2023] FWCFB 122 at [4]
3
4 [2023] FWCFB 105 at [18]
5 See Suncaost Scaffolding Pty Ltd id and Applications by APESMA [2023] FWCFB 137 at [31]
6 id
https://www.fwc.gov.au/documents/decisionssigned/pdf/2023fwcfb105.pdf
https://www.fwc.gov.au/documents/decisionssigned/pdf/2023fwcfb122.pdf
https://www.fwc.gov.au/documents/decisionssigned/pdf/2023fwcfb105.pdf
https://www.fwc.gov.au/documents/decisionssigned/pdf/2023fwcfb137.pdf
