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Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
Sch. 3A, Item 26A(4) - Application to extend default period for Division 2B State
employment agreements
233 Victoria Square Hotel Pty Ltd T/A Hilton Adelaide
(AG2023/1477)
HILTON ADELAIDE ENTERPRISE AGREEMENT 2006
[AG865384]
Hospitality industry
DEPUTY PRESIDENT WRIGHT
DEPUTY PRESIDENT ROBERTS
DEPUTY PRESIDENT SLEVIN
SYDNEY, 19 SEPTEMBER 2023
Application to extend the default period for Hilton Adelaide 2006 Certified Agreement
[1] 233 Victoria Square Hotel Pty Ltd (Applicant) has applied under 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 Hilton Adelaide 2006 Certified
Agreement (Agreement) for a period of four years.
[2] The Agreement was certified by the Australian Industrial Relations Commission under
s170LT of the Workplace Relations Act 1996 on 31 May 2006. It is a collective agreement-
based transitional instrument within the meaning of item 2(5)(c) of Sch 3 to the Transitional
Act. Such instruments continue to apply because of item 3 of Sch 3.
[3] The Transitional Act was amended by the Fair Work Legislation Amendment (Secure
Jobs, Better Pay) Act 2022 (Cth) to provide for the automatic termination of all remaining
transitional instruments. The Amendment Act referred to such instruments as ‘zombie’
agreements. Pursuant to the amendments, items 20A(1) and 20A(2) of Sch 3 to the
Transitional Act mean the Agreement will terminate on 6 December 2023 unless it is
extended by the Commission. The main features of item 20A of Sch 3 to the Transitional Act
are described in detail in the Full Bench decision in Suncoast Scaffold Pty Ltd1 and we rely
upon what is said in that decision.
[2023] FWCFB 163
DECISION
AUSTRALIA FairWork Commission
http://www.austlii.edu.au/au/legis/cth/consol_act/fwpacaa2009656/
http://www.austlii.edu.au/au/legis/cth/consol_act/fwpacaa2009656/
http://www.austlii.edu.au/au/legis/cth/num_act/fwlajbpa2022516/
http://www.austlii.edu.au/au/legis/cth/num_act/fwlajbpa2022516/
http://www.austlii.edu.au/au/legis/cth/num_act/fwlajbpa2022516/
[2023] FWCFB 163
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[4] The application is made under subitem (4) of item 20A of Sch 3. Under subitem (6),
upon application, the Commission is required to extend the default period for an agreement
for a period of no more than four years 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.
[5] The application to extend the default period for the Agreement is made by reference to
subitem (6)(a) on the basis that subitem (9) applies and it is otherwise appropriate to do so.
[6] Subitem (9) applies if:
(a) the application relates to a collective agreement-based transitional instrument and;
(b) it is likely that, as at the time the application is made, the award covered employees
for the instrument under subitem (10), viewed as a group, would be better off overall if
the instrument applied to the employees than if the relevant modern award or awards
referred to in that subitem applied to the employees.
[7] Under subitem (10) of item 20A, ‘award covered employees’ for a collective
agreement-based transitional instrument are those employees covered by the instrument who,
at the time an extension application is made under subitem (4), are covered by one or more
modern awards that are in operation in relation to the work to be performed under the
instrument, and are employed at that time by an employer who is covered by the instrument
and the modern award(s).
[8] In addition to the information in the application, the Applicant provided witness
statements from Ms Barbara Mula, Director – Human Resources and submissions going to the
nature of the workforce, the better off overall test and the undertakings. Submissions were
also made by the United Workers Union (UWU). It is not in dispute that the Applicant is
covered by the Hospitality Industry (General) Award 2020 (Hospitality Award) and that is
the relevant modern award for the purpose of the better off overall test (BOOT) in subitem
9(b).
Better Off Overall Analysis
[9] Ms Mula gave evidence that the Applicant employed 317 employees under the
Agreement. Forty-one employees were employed on salary arrangements, 40 as full-time
employees, 83 as variable part time employees, 6 as fixed part time employees and 142 as
casual employees. Ms Mula expressed the view that the employees were better off under the
Agreement as the following terms provided benefits in excess of the Award:
a. Clause 24 - which effectively provides a guarantee of minimum payment rates of 1
% above the Hospitality Modern Award.
b. Clause 23 - which provides that employees classified at Levels 2, 3 and 4 are able to
attain an additional classification level (being Levels 2A, 3A and 4A) to recognise
their experience and wages are adjusted above the classification level below.
[2023] FWCFB 163
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c. Clause 17(g)(i) - which effectively provides that full-time employees receive a
penalty of 150% of minimum rates for work performed on a Saturday and a penalty
of 175% for work performed on a Sunday.
d. Clause 17(g)(i) - which effectively provides variable part-time employees receive a
penalty of 110% for all hours performed during Monday to Friday.
e. Clause 17(g)(iii) - which effectively provides that all part-time employees receive a
penalty of 150% of minimum rates for work performed on a Saturday and a penalty
of 175% for work performed on a Sunday.
f. Clause 17(g)(iv) - which effectively provides that all casual employees receive a
penalty of 150% for all hours.
[10] An issue arises concerning clause 24 of the Agreement which deals with wage rates.
Clause 24 sets wage rates. The introduction to clause 24 of the Agreement reads:
What is my wage rate?
You will be paid at the rate appropriate to your classification level according to the
table below. Provided that the Hotel guarantees that the applicable ordinary hourly rate
will always exceed the minimum rate provided in the Hotels Clubs Etc Award (SA) or
(when implemented) the Australian Fair Pay Commission Minimum Wage rate by
1.0%. Where there is no equivalent award Classification (Level 2A, 3A, 4A) the wage
will be adjusted to maintain the relativities existing between the appropriate level and
the level below (Level 2, 3 and 4 respectively).
[11] On its face, the clause does not set rates at 1% higher than the Hospitality Award. The
Applicant was asked to address this issue and did so in a witness statement of Ms Mula
directed at the issue and by providing submissions. The UWU also made submissions on the
issue.
[12] That material explains that when the Agreement was certified it did not apply to the
Applicant. It applied to Sitehost Pty Ltd trading as Hilton Adelaide (Sitehost) and to persons
employed by Sitehost who performed work which would otherwise have been within the
scope of the Hotels, Clubs, Etc.,Award, or the Clerks Clubs, Hotels, Motels (SA) Award.
[13] In or around mid-2022 there was a transfer of business from Sitehost to the Applicant.
At that time the Applicant made application to the Commission under s.319 of the Fair Work
Act 2009 (FW Act) for an order that the Agreement cover the Applicant and non-transferring
employees who performed work that was the same, or substantially the same, as work
performed for Sitehost (Transfer Order). The Agreement transferred and applied to
employees who met the description of transferring employees by operation of s.313 of the FW
Act. An order was necessary to ensure that persons employed by the Applicant after the
transfer, described in s.314 as non-transferring employees, would also be covered by the
Agreement.
[14] The Transfer Order was made2. The Commission’s decision setting out the reasons for
making the Transfer Order recorded the following:
[2023] FWCFB 163
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[8] On 27 May 2022, I conducted a conference, by telephone, in respect of both
applications. Mr Nicholas Linke was granted permission under s.596 of the Act to
represent the Applicant at the conference and appeared with Ms Barbara Mula. Ms
Louise Dillon represented the United Workers’ Union (UWU). The UWU are entitled
to represent employees covered by the Hilton Agreement3.
[9] During the conference, the Applicant gave an undertaking that:
• The Hilton Agreement will be read and interpreted in conjunction with the
National Employment Standards (NES), and where there is any
consistency between the Agreement and the NES and the NES provides a
greater benefit, the NES will prevail to the extent of the inconsistency.
• The Hilton Agreement will be read and interpreted such that any reference to
an Award is a reference to the Hospitality Award.
• The Applicant will ensure that a copy of these undertakings is made available
to all employees covered by the Hilton Agreement, and ensure that a copy of
the instrument is attached to any copy of the Hilton Agreement provided to
employees or made available in the workplace.
[10] On the basis of the above undertakings provided by the Applicant, the
UWU did not object to the application in respect of the Hilton Agreement.
[11] Having considered each of the matters outlined in s.319(3) of the Act and the
material that has been filed, I am satisfied that orders pursuant to s.319(1)(b) of the
Act should be made in respect of both applications. The orders will be issued
concurrently with this decision.
[15] The Applicant contends that the effect of the Transfer Order, read with the undertaking
set out at [9] of the decision (Undertaking) andthe guarantee in clause 24, is that the ordinary
hourly rate will always exceed the minimum rate provided in the Hospitality Award by 1%.
This has been the practice of the Applicant in setting rates for employees under the
Agreement.
[16] A question arises as to whether the Undertaking can be taken into account when
conducting the BOOT under subitem (9)(b) of item 20A of the Transitional Act. The
Applicant contends that it can, as it is to be regarded as a term of the Agreement.
[17] The Applicant submits, primarily, that the Commission’s decision under Part 2-8 of
the Act, which ordered that the Agreement apply to non-transferring employees, should be
read as having varied the Agreement to incorporate the undertakings into the Agreement. It is
said that this arises because the Commission’s decision had the effect of incorporating a
decision to vary the Agreement pursuant to s.320 of the FW Act. We do not agree with this
proposition.
[18] Section 320, which deals with variations of transferable instruments, provides the
Commission with power to vary a transferable instrument in limited circumstances. These
circumstances include to remove terms that are not or will not be capable of meaningful
operation because of the transfer of business, or, to remove an ambiguity or uncertainty, or, to
enable the instrument to operate in a way better aligned to the working arrangements under
the new enterprise. The power to vary transferable instruments under s.320 is only available
[2023] FWCFB 163
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upon application and in deciding to make the variation the Commission is required to take
into account a list of factors.
[19] When the Commission made the Transfer Order it did not have before it an application
under s.320 and consequently did not consider the matters that it was required to consider
under that section. The Undertaking cannot be regarded as a variation to the Agreement in the
way contended for by the Applicant.
[20] The Applicant contends, in the alternative, that because the Undertaking was given to
the Commission in proceedings and was referred to in its decision, it arguably has the
standing that would be given to an undertaking to a court and should be regarded as binding
as a court order. In making this submission the Applicant adopted a submission to the same
effect made by the UWU. Again, we disagree.
[21] The nature of the Undertaking can be seen on the face of the Commission’s decision.
It was made in conference. It was made in the context of addressing concerns raised by the
UWU. Once the Undertaking was given ,the UWU did not object to the order being granted. It
does not appear to be an undertaking to the Commission, per se, and, in any event, as the
Commission is not a court, there can be no suggestion that it is akin to or has the status of a
court order.
[22] Having determined that the Undertaking is not a term of the Agreement, the BOOT
analysis we will apply will be on the basis that the Agreement does not include the
Undertaking as a term and clause 24, in particular, does not operate to afford wage increases
to employees to maintain wages at 1% above the Hospitality Award. We note that this is the
practice of the Applicant in accordance with the Undertaking, but we are of the view that it is
not a benefit afforded as a term of the Agreement.
[23] It is the Commission’s practice in applications to extend the default period for zombie
agreements to seek an analysis of the agreement against the relevant award from the
Commission’s Agreements Team for the purpose of the BOOT. This was done in the present
case and that analysis was provided to the Applicant and the UWU to comment.
[24] The analysis concerning full time and fixed part time employees was that the
Agreement generally provides terms similar to the Hospitality Award for full time and fixed
part time employees with more beneficial Saturday and Sunday ordinary hour penalties and
less beneficial public holiday penalties. Overtime provisions are less beneficial when
compared to the Award. Full time and fixed part time employees cannot be considered better
off overall when compared to the Award given the less beneficial Monday to Saturday
overtime and public holiday provisions.
[25] The Agreement also provides for variable part time employees. This is not a category
of employment provided for in the Award. These employees receive a loading of 10% for
work performed Monday to Friday. They also receive more beneficial Saturday and Sunday
ordinary hour penalties. The hours of work for variable part time employees in the Agreement
are between 782 and 1981 hours per annum which are averaged over a four-week period. This
is inconsistent with part time provisions in clause 10.4 of the Award which provides for the
setting of guaranteed rather than variable hours. The overtime provisions in the Agreement
are less beneficial Monday to Saturday and on public holidays. Whether these employees are
better off overall when compared to the Award will depend on the number of overtime hours
[2023] FWCFB 163
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worked. Given the higher penalties for working ordinary hours on Saturday and Sunday,
variable part time employees who consistently work weekends may be considered better off
overall.
[26] The Agreement is silent on most Award allowances. It does not provide a definition of
shift worker for the purposes of additional annual leave. These matters leave the employees
worse off.
[27] Employees may receive an annualised salary under clause 17(f) of the Agreement,
however, the Agreement is silent on the safeguards provided for at clause 24.2 of the Award.
Consequently, these employees cannot be considered better off overall.
[28] The Agreement provides less beneficial shift penalties for shifts worked Monday to
Friday, as it provides a premium of $1.39 per hour for work performed between 7pm and
6.59am. The Award provides a penalty of $2.48 for hours worked between 7pm and Midnight
and a penalty of $3.71 for hours worked between Midnight and 7am. Full time and fixed part
time rates in the Agreement are not high enough to compensate for this reduction.
[29] For casual employees, clause 17(g)(iv) of the Agreement provides that a premium of
50% of the ordinary rate of pay with a minimum engagement of 2 hours, however it expressly
excludes casual employees from overtime penalties and premiums.
[30] The casual rate can be taken as being a loaded rate and, as the Full Bench said in
Loaded Rates in Agreements4 at [121], it will be difficult for casual employees with loaded
rates to be considered better off overall, because ‘it would always be possible for the casual
employee, in a given pay period, to be engaged to work on a day or at a time which would
attract the payment of penalty rates under the relevant award and not to be engaged on any
other hours or at any other times’. Consequently, casual employees cannot be considered
better off overall.
[31] In its response to the analysis conducted by the Commission’s Agreements Team, the
Applicant noted that the Agreement provided wages that were higher than the Award. This is
a reference to the 1% paid in accordance with the Undertaking. The Applicant accepted that
the Agreement provided less beneficial entitlements for permanent employees in relation to
overtime on Monday to Saturday and for public holidays. It accepted that the Agreement was
silent on almost all Award allowances. It also accepted that the exclusion of casuals from
overtime penalties was less beneficial. It accepted that apprentices were worse off. It accepted
that the safeguards in clause 15.1 of the Award in relation to the way ordinary hours are
worked were not present in the Agreement. It also accepted that there was no definition of
shift worker for the purpose of additional annual leave.
[32] The Applicant proposed new undertakings to address these issues (new
undertakings). The new undertakings addressed each issue in turn and were in effect that if
the default period for the Agreement was extended the Award terms would be applied to
ensure the employees were not worse off.
[33] In relation to employees engaged as variable part time employees, the Applicant also
submitted that the flexible rostering arrangements for these employees provides a benefit to
employees as they are from a demographic that appreciates flexibility. Ms Mula’s witness
statement dated 7 August 2023 described the employees as working parents or students who
[2023] FWCFB 163
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appreciated the flexibility of the rostering system. Regarding annual salaries, the Applicant
contended that while the Agreement did not provide protections in clause 25 of the Award, in
practice it substantially complies with them. The Applicant submitted that the less beneficial
shift penalties were adequately compensated in the higher rates paid in the Agreement.
[34] The Applicant submitted that factoring in the new undertakings the employees were
better off overall on a global basis if the Agreement applied rather than the Award.
[35] As to the new undertakings proposed by the Applicant, we are of the view that they
can form no part in the assessment of the better of overall test in item 20A(9)(b) of Schedule
3. Subitem (9)(b) requires a finding that it is likely at the time the application to extend the
default period is made, the award covered employees, viewed as a group, would be better off
overall if the collective agreement based transitional instrument applied to those employees
than if the relevant award applied to them. The focus is on a comparison between the
instrument, here the Agreement, and the modern award, here the Hospitality Award. If is
likely that the employees are not better off overall, then subitem (9) does not apply. There is
no mechanism in item 20A that allows the Commission to accept undertakings to remedy any
perceived deficiency in the collective agreement-based transitional instrument. The Schedule
does not operate in the same manner as Division 4 of Part 2-4 of the FW Act which allows the
Commission to approve enterprise agreements with undertakings.
[36] In Suncoast Scaffolding Pty Ltd5 the Full Bench identified differences between the
better off criterion in subitem (9)(b) and the better off overall test in s.193 of the FW Act. We
would add to those observations that the Transitional Act does not contain a provision
equivalent to s.190 of the FW Act which permits the Commission to accept undertakings from
an employer to addresses concerns that the BOOT in s.193 has not been met.6 The criterion in
subitem (9)(b) is similar to, but not the same as, the test in s.193 in that it requires a
comparison between the agreement and the modern award. The consequence of a finding
under subitem (9)(b) that the BOOT has not been met, unlike a similar finding under s.193,
cannot be addressed by the Commission accepting undertakings designed to cure the
deficiencies in the agreement to ensure that the employees are better off.
[37] As no mechanism is available to either consider or accept the undertakings, the new
undertakings can play no role in our consideration of whether the default period should be
extended.
[38] The UWU made no submission on the BOOT. It submitted that the Agreement should
be read as including the Undertaking to ensure wages were maintained at 1% above the
Hospitality Award. It contended that the continued operation of the Undertaking was
necessary to ensure the employees were not disadvantaged in relation to their terms and
conditions of employment.
Consideration
[39] As the Full Bench said in Suncoast Scaffolding, the better off overall test in item
20A(9) involves a broad evaluative judgment based upon an overall comparison of the terms
of the transitional instrument and the relevant award in its application to the award covered
employees.
[2023] FWCFB 163
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[40] Our view is it is not likely that, as at the time the application was made, the
employees, viewed as a group, would be better off overall if the Agreement applied to the
employees than if the Hospitality Award applied. Our finding is based on our view that
neither the Undertaking nor the new undertakings can be taken into account. The Undertaking
does not result in the Agreement providing wages 1% above the Hospitality Award. The rates
of pay in clause 24 of the Agreement are referrable to earlier awards that no longer operate.
As we note above, the Applicant has applied rates that are referrable to the Hospitality Award
but this has occurred in accordance with the Undertaking rather than as a consequence of a
term of the Agreement. That finding alone must lead to a conclusion that the better off overall
test is not met.
[41] We also find that, taken as a whole, the other terms of the Agreement are less
beneficial than the terms of the Award and that the new undertakings cannot operate to cure
those deficiencies. The Commission’s analysis identifies the provisions of the Agreement that
provide inferior terms and conditions. The Applicant’s response to many of those was to
address them by providing the new undertakings. In doing so, it appears the Applicant accepts
that those terms are inferior and need addressing. As the Transitional Act differs from the FW
Act in that BOOT deficiencies cannot be addressed by undertakings it cannot be said that in
relation to those terms the employees will be better off overall under the Agreement.
[42] Ms Mula’s evidence and the submission of the Applicant was that the employees
preferred to have the Agreement apply as it provided flexibility and certainty. The Applicant
also submitted that in practice it was observing many of the Award conditions that were not
reflected in the Agreement. Its undertakings were to the effect that it would do so. These
matters may have been relevant if we were required to make an assessment of whether it is
appropriate to extend the default period for the Agreement. However, as subitem 9(b) is not
met we are not required to do so.
[43] Those additional matters may also be relevant to a consideration of whether it is it is
reasonable in the circumstances to extend the default period under subitem 6(b). The
Applicant referred to this limb of subitem 6(b) but made no submissions directed to it.
Subitem 6(b) also calls for a broad evaluative judgement7. We do not find that it would be
reasonable to extend the default period in the circumstances. If it is necessary to achieve
flexibility and certainty in the working arrangements beyond that provided by the Hospitality
Award, then that can be achieved by the making of an enterprise agreement under Part 2-4 of
the FW Act. An enterprise agreement would also enable the practice of providing wage rates
in excess of the Award to be formalised.
Conclusion
[44] Neither item 20A(6)(a) nor (b) is met so we are not required to extend the default
period for the Agreement. The application is dismissed.
[2023] FWCFB 163
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DEPUTY PRESIDENT
Printed by authority of the Commonwealth Government Printer
AG865384 PR766397
1 [2023] FWCFB 105 (‘Suncoast Scaffolding’).
2 PR742144
3 [2022] FWC 1364
4 [2018] FWCFB 3610.
5 [2023] FWCFB 105 at [15]
6 There are similar provisions permitting the Commission to accept undertakings in the context of variations to agreements in
s212 and upon a reconsideration of the BOOT under s.227B.
7 Suncoast Scaffolding at [17]
OF THE FAIR WORK L MISSION THE SEA
https://www.fwc.gov.au/documents/decisionssigned/pdf/2023fwcfb105.pdf
https://www.fwc.gov.au/documents/awardsandorders/html/pr742144.htm
https://www.fwc.gov.au/documents/decisionssigned/html/2022fwc1364.htm
https://www.fwc.gov.au/documents/decisionssigned/html/2018fwcfb3610.htm
https://www.fwc.gov.au/documents/decisionssigned/pdf/2023fwcfb105.pdf
