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Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
Sch. 3, Item 20A(4) - Application to extend default period for agreement-based transitional
instruments
Ross Matthew Gibson
(AG2023/2600)
FERRO CORPORATION (AUST) PTY LIMITED MOORABBIN PLANT
ENTERPRISE AGREEMENT 2006
Manufacturing and associated industries
DEPUTY PRESIDENT WRIGHT
DEPUTY PRESIDENT ROBERTS
DEPUTY PRESIDENT SLEVIN
SYDNEY, 20 OCTOBER 2023
Application to extend the default period for the Ferro Corporation (Aust) Pty Limited
Moorabbin Plant Enterprise Agreement 2006
Introduction
[1] Ross Matthew Gibson has applied under item 20A(4) of Sch 3 of the Fair Work
(Transitional Provisions and Consequential Amendments) Act 2009 (Cth) (Transitional Act) to
extend the default period for the Ferro Corporation (Aust) Pty Limited Moorabbin Plant
Enterprise Agreement 2006 (Agreement). The Agreement was approved under the Workplace
Relations Act 1996 (Cth) (WR Act) and is a WR Act Instrument for the purposes of Sch 3 of
the Transitional Act. Mr Gibson seeks an extension of four years.
[2] Ferro Corporation (Aust) Pty Limited (Ferro), which is covered by the Agreement, does
not oppose the application but objects to the length of the extension.
[3] The Agreement is a collective agreement-based transitional instrument within the
meaning of subitem 2(5)(c) of Schedule 3 of the Transitional Act. It remains in operation
because of item 3 of Schedule 3.
[4] The Transitional Act was amended by the Fair Work Legislation Amendment (Secure
Jobs, Better Pay) Act 2022 to provide for the automatic termination of all remaining transitional
instruments. Pursuant to subitem 20A(1) and (2) of Sch 3 of the Transitional Act, the Agreement
will terminate on 6 December 2023 unless it is extended under subitems 20A(6) or (11)(e). The
main features of item 20A of Sch 3 of 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.
1 [2023] FWCFB 105
[2023] FWCFB 192 [Note: A copy of the zombie agreement to which this
decision relates (AC301276) is available on our website.]
DECISION
AUSTRALIA FairWork Commission
https://www.fwc.gov.au/documents/agreements/approved/ac301276.pdf
[2023] FWCFB 192
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[5] Under subitem 20A(6), the Fair Work Commission (Commission) is required to extend
the default period for an Agreement for a period of no more than 4 years if the Commission is
satisfied that subitem (7), (8) or (9) applies and it is otherwise appropriate in the circumstances
to do so, or it is reasonable in the circumstances to do so.
[6] Mr Gibson relies upon subitem (9) which applies if the application relates to a collective
agreement-based transitional instrument and 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. We refer to this
as the better off overall test or BOOT.
[7] Identifying the award or awards for the purposes of subitem (10) is not straightforward.
At the time the Agreement was made in 2006, Mr Gibson was employed in manufacturing
operations. There is one other employee covered by the Agreement, Mr Mimic. Mr Mimic was
also employed at that time in manufacturing operations. When the Agreement was made Ferro
manufactured ceramic glaze and coating materials for use in the construction industry at its
Moorabbin site. At that time, the employees were covered by the Metal, Engineering and
Associated Industries Award 1998 (parts of which are incorporated into and form part of the
Agreement). Sometime around 2009 Ferro ceased its manufacturing operations and the
Moorabbin site was closed, and Mr Gibson and Mr Mimic transferred to Ferro’s Dandenong
South site.
[8] Ferro now operates as a sales and distribution warehouse, importing goods from
manufacturing sites in China, Mexico, France, Spain, Germany, Thailand and the United States.
The goods are shipped to the Ferro site in Dandenong South, and then checked, unloaded and
stored on-site. Customers from within Australia and New Zealand, as well as some other South-
East Asian countries, will place orders for these goods which will then get picked, packed, and
loaded for transport.
[9] Ferro continues to operate and maintain a small laboratory. Mr Gibson is currently
employed as an Administration and Laboratory Technician. His classification under the
Agreement is C-5 Technician. Mr Mimic is employed as a Store Charge Hand. His classification
under the Agreement is C-9 Chargehand. Ferro considers that the employees would now be
covered by either the Storage Services and Wholesale Award 2020 (Storage Award) or
potentially the Clerks – Private Sector Award 2020 (Clerks Award). Mr Gibson considers that
he would be covered by either the Manufacturing and Associated Industries and Occupations
Award 2020 (Manufacturing Award) or the Storage Award.
[10] To determine the question of the appropriate award for Mr Gibson we were assisted by
a document prepared by Ferro, with the assistance of Mr Gibson, setting out his duties. Mr
Gibson also provided a copy of a job description provided to him in May 2023 and a revised
list of functions. His title according to the job description is Customer Support Coordinator &
Lab Technician. The documents show Mr Gibson spends a significant amount of time on
technical tasks associated with quality control and quality assurance, new product development
and product testing, and working in a laboratory. He also provides support to the warehousing
function and performs administrative tasks associated with both the technical aspects of his job
and the warehouse. We were not provided with details of Mr Mimic’s work.
[2023] FWCFB 192
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[11] The Storage Award covers employers in the storage services and wholesale industries
industry and the classifications of employees listed in the award.2 The storage services and
wholesale industry means the receiving, handling, storing, freezing, refrigerating, bottling,
packing, preparation for sale, sorting, loading, dispatch, delivery, or sale by wholesale, of
produce, goods or merchandise as well as activities and processes connected, incidental or
ancillary.3 The Storage Award lists a number of more specific exclusions and inclusions.4 The
Storage Award does not apply to an employer covered by another award that contains
classifications within the definition of the storage services and wholesale industry with respect
to employees covered by that other award.5 The classifications in the Storage Award include
Storeworkers and Wholesale Employees. There are 4 Storeworker grades. The skills and duties
of a grade 4 Storeworker include high level administrative work and quality control techniques
and procedures which accord with the description of Mr Gibson’s work.
[12] While we are not provided with details of Mr Mimic’s work, Mr Gibson who was given
authority by Mr Mimic to make submissions on his behalf has done so on the basis that the
Storage Award covers Mr Mimic.
[13] Ferro suggests that the Clerks Award may cover the employees. The Clerks Award
applies in relation to employers and employees wholly or principally engaged in clerical work.
We do not consider either Ferro or Mr Gibson to be wholly or principally engaged in clerical
work, consequently, the Clerks Award does not apply.
[14] Mr Gibson submits that in relation to his work the Manufacturing Award applies. The
Manufacturing Award covers employers of employees in the Manufacturing and Associated
Industries and Occupations covered by the classifications in the award and those employees.6
Manufacturing and Associated Industries and Occupations is defined by reference to a list of
industries and parts of industries and a list of occupations.7 We do not consider, on the
information provided, that Ferro is in any of the industries or part of industries described in the
list of industries. The definition of occupations in the coverage clause of the Manufacturing
Award includes technical officer and the classifications in Schedule A to the Award include
Laboratory Technical Officers.8 Indeed, both the C5 wage group and C9 wage groups, which
appear to be the genesis of the Agreement classifications for Mr Gibson and Mr Mimic
respectively, refer to Laboratory Technical Officers. Mr Gibson’s duties continue to fall within
the description of Laboratory Technical Officers. This being so he is an occupation described
in the coverage clause of the Manufacturing Award.
[15] We consider the instrument relevant to the BOOT, under subitem (10) for Mr Gibson is
the Manufacturing Award. We accept the submissions on behalf of Mr Mimic that Mr Mimic
is covered by the Storage Award. Consequently, we have considered the BOOT against the
Manufacturing Award for Mr Gibson and the Storage Award for Mr Mimic. Given the limited
evidence these conclusions are not without some doubt.
2 clause 4.1
3 clause 4.2
4 clause 4.3 – 4.7
5 clause 4.3
6 clause 4.1
7 clause 4
8 Attachment A at A4.13-A4.16
[2023] FWCFB 192
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[16] We are required to apply a two-stage test. First, whether we are satisfied the employees
will be better off overall if the Agreement does not sunset. Second, if we are satisfied on the
BOOT, whether it is otherwise appropriate in the circumstances to extend the default period. If
we are so satisfied, we will need to determine how long to extend the default period.
Better Off Overall
[17] As is the Commission’s practice in these matters, the Commission’s Agreements Team
prepared a BOOT analysis. The analysis was of the terms of the Agreement against both the
Manufacturing Award and the Storage Award. Submissions were received from Mr Gibson and
Ferro in response to that analysis. Arising from the analysis and the submissions we note the
following matters.
Wage Rates
[18] The Commission’s analysis was that the Agreement contains rates of pay that are either
equal to the Awards, by virtue of item 13, Sch 9 the Transitional Act, or are up to 12 % higher
for the Manufacturing Award and up to 25% higher than the Storage Award. The Agreement
rates for a laboratory technician such as Mr Gibson are at best marginally higher than the
Manufacturing Award. The analysis was not able to identify an award rate for Mr Mimic but
all of the rates in the Agreement will be either the same or higher than the Storage Award.
[19] Mr Gibson contended that he was paid around 48% higher than the C5 rates in the
Manufacturing Award and Mr Mimic was paid 73% above the relevant Storage Award rate. Mr
Gibson’s figures are based on the actual pay received by the employees. The Agreement only
required three annual increases of 3% after it was approved. Over the years Ferro has applied
wage increases above those required by the Agreement, leading to payments which are now in
excess of the Agreement. The actual rates are not relevant to the test in subitem 20A(9)9. The
relevant rate is the rate that is required to be paid under the Agreement. We find that as the
employees are required to be paid the Award base rates due to item 13 of Sch 9 to the
Transitional Act they are not better off in terms of wages if the Agreement remains in place
after 6 December 2023.
Entitlements
[20] The Commission’s analysis is that the Agreement offers a number of more beneficial
terms compared to both the Manufacturing and Storage Awards including:
• A higher call back allowance for employees other than laboratory employees, where
the call back time is worked before 5:00am.
• More beneficial paid breaks of 40 minutes for shift workers, other than Laboratory
Employees, compared to 20 minutes under the Awards.
9See for example All Seasons Carpet Cleaning Collective Agreement [2023] FWCFB 158, [23]; Drilled Foundations
Contracting Pty Ltd and CFMEU Collective Union Agreement 2007 and the Piled Foundations Contracting Pty Ltd and
CFMEU Collective Union Agreement 2007 [2023] FWCA 3011, [40]; Payfam Enterprise Pty Ltd T/A Ravenshoe IGA
Everyday [2023] FWCFB 173, [45]
[2023] FWCFB 192
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• An additional shower time allowance of 10 minutes inclusive in the normal hours of
work.
• Entitlement to be paid a percentage of accrued personal/carer’s leave on resignation,
retirement or termination of employment, up to a maximum of 96 days.
• In respect to day workers, the Agreement provides an increased minimum engagement
of four hours for work on Saturdays, compared to three hours under the Storage
Award and no minimum engagement under the Manufacturing Award.
• In respect to continuous shiftworkers, annual leave loading of 17.5% is calculated on a
42-hour basis per week of leave.
• The Agreement offers a 20% loading for all work carried out by continuous
shiftworkers Monday to Friday. This is greater than the early morning and afternoon
shift penalties payable under the Storage Award, and greater than the afternoon and
night shift available under the Manufacturing Award.
• Greater redundancy payments of 4 weeks’ pay per year of service, capped at the
amount which the employee would have earned if employment with the company had
proceeded to the employee’s normal retirement date, plus the payout of accrued
personal leave up to a maximum of 96 hours.
[21] On accrued personal/carers leave Mr Gibson points out that he currently has 190 days
accrued, entitling him to a payout of $32,306 on termination and Mr Mimic has accrued 81 days
with a payout entitlement of $20,910. In relation to redundancy pay Mr Mimic has 23 years’
service and his Agreement redundancy entitlement is currently worth $154,802.88 compared to
the NES entitlement of $20,191.68 and Mr Gibson’s is $144,565.68 under the Agreement
compared to $20,652.24.
[22] The Commission’s analysis was that when compared to the Manufacturing Award, the
Agreement contains allowances which are lower, on the basis that allowances under the
Agreement are increased in line with the percent increases of the wages which is only three 3%
increases. This includes lower first aid allowance, lead work allowance and motor vehicle
allowance. The Agreement is silent with respect to other allowances. The analysis considered
that it is unlikely that a number of the Award allowances apply to the work done at Ferro.
[23] When compared to the Storage Award, the Agreement contains the following less
beneficial entitlements: overtime penalties, penalties for continuous shiftworkers, minimum
shifts for dayworkers and lower first aid and motor vehicle allowances. Again, the Agreement
is silent on other allowances but the analysis indicated that it is unlikely that a number of the
Award allowances apply to Ferro and its employees.
[24] In his response, Mr Gibson points out that shiftwork has not been worked in over 10
years. He also states that no weekend work or overtime is worked. He also confirms that the
allowances in the Agreement are less than the Awards and the allowances not mentioned in the
Agreement to not apply to the work and he asserts the rostered day off provisions in the
Agreement are more beneficial than the Award provisions.
[2023] FWCFB 192
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Otherwise Appropriate
[25] As to whether it is otherwise appropriate to extend the default period for the Agreement,
Mr Gibson points to the discussions with Ferro about the terms and conditions to replace the
Agreement once the default period ends and offers of individual contracts that would result in
a reduction in terms and conditions. We were provided with email exchanges between Mr
Gibson and Ferro on this topic. Mr Gibson’s particular concern is that he will lose his
entitlement to payment for accrued sick leave, that his entitlement to redundancy pay will be
capped, and his rostered day off entitlement will be taken from him. In the email exchanges Mr
Gibson and Ferro expressed competing views about whether the Agreement continued to apply,
Ferro initially asserting it did not and then subsequently agreeing to continue to apply it and
withdrawing its contention that it did not. There was also debate over the correct modern award
to cover the employees.
[26] Mr Gibson describes the discussions as causing stress, anxiety, and frustration due to
the lack of clarity and questions over determining the correct coverage of the Agreement and
his ongoing terms and conditions. The disagreements were left on the basis that the existing
terms and conditions would continue to apply, although it was not clear in the correspondence
how this would be achieved. There was not, for example, a further offer of contract.
[27] Mr Gibson also submits that Ferro is part of a group of international companies and
there is no financial detriment to Ferro should the default period be extended.
Consideration
[28] As noted above, the application relates to a collective agreement-based transitional
instrument which satisfies the requirements of subitem 20A(9)(a). In relation to the better off
overall criterion in subitem (9)(b), the Full Bench in Suncoast Scaffold said:10
[15] The requirement for the better off overall criterion in subitem 9(b) to be assessed
by reference to the award covered employees ‘viewed as a group’ appears to allow for
the possibility that the criterion may be satisfied, notwithstanding that some individual
employees are not better off overall than under the relevant award, as long as there is a
discernible advantage for the employees considered as a collective. Further, there only
needs to be satisfaction as to the ‘likelihood’ of such a discernible collective advantage;
that is, it only needs to be probable rather than certain. Taking these matters together, it
is apparent that the better off overall criterion is less stringent that the BOOT in s 193
of the FW Act. However, beyond these broad observations, subitem 9(b) discloses no
methodology as to how the criterion is to be applied. All that can be said is that a broad
evaluative judgment is required based upon an overall comparison of the terms of the
transitional instrument and the relevant award(s) in their application to the cohort of
award covered employees.
[29] We have considered the BOOT analysis on the basis that base rates of pay under the
Agreement are the same as the Awards. We note the Agreement contains an additional shower
time allowance of 10 minutes which is deemed time worked, provides for payout of accrued
but untaken personal leave, and has significantly higher redundancy payments.
10 [2023] FWCFB 105, [15].
[2023] FWCFB 192
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[30] Taking into account these benefits and that many the aspects of the Agreement, such as
less beneficial shift provisions, do not apply to the two employees covered by the Agreement,
we are satisfied that it is 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 than if the Award
applied.
[31] Having found that the employees are better off covered by the and subitem 20A(9)
applies, we are now required to consider whether it is otherwise appropriate in the
circumstances to extend the default period for the Agreement.
[32] Mr Gibson’s concern is a lack of clarity over his ongoing terms and conditions. Ferro
has made offers of individual contracts that he says will result in reduced terms and conditions.
Representations have also been made that his terms and conditions will remain the same as the
Agreement, although it is unclear how long those arrangements will apply.
[33] As the Full Bench pointed out in Application by Margaret Ellen McDonald11, the
Explanatory Memorandum for the Fair Work Legislation Amendment (Secure Jobs, Better Pay)
Bill 2022 included at [670] a statement that provision would be made for the Commission to
extend the default period for zombie agreements to ensure the automatic sunsetting does not
operate harshly, including by leaving employees worse off.
[34] The Full Bench in One HPA Certified Agreement 2004-2007, the EDS People
Agreement 2002 and the Alcatel Lucent Employment Partnership Agreement 2009 (One HPA,
EDS and Alcatel Lucent)12 found that it was appropriate to extend the default period to preserve
the terms and conditions of employment where the employer had offered terms and conditions
less favourable than the relevant agreements. This is the case here and we see no reason to
depart from that approach. In the current case Ferro has made some suggestion that it will
maintain the current terms and conditions, but we see no formal offer to do so, leaving the
situation uncertain.
[35] We are of the view that it is appropriate to extend the default period in the circumstances.
The sunsetting of the Agreement will operate harshly on Mr Gibson and Mr Mimic by leaving
them worse off. We propose to extend the default period to allow the parties time to resolve
the question of the ongoing terms and conditions of employment.
[36] Mr Gibson seeks an extension of four years. We have discretion in relation to the length
of the extension and are not bound to grant the period of extension sought in the application,
which is the maximum period.13
[37] In the current matter, we believe an extension of 12 months from the end of the default
period is warranted to allow negotiations to be finalised to secure the employees terms and
conditions. This could be done quickly by Ferro formalising the representations they have made
to Mr Gibson in their emails. It may take longer if it becomes necessary for Mr Gibson and Mr
Mimic to seek to enter into an enterprise agreement to replace the Agreement. Should this
course be necessary the employees will need time to pursue an agreement.
11 [2023] FWCFB 175 at [27]
12 [2023] FWCFB 137
13 Suncoast Scaffold Pty Ltd [2023] FWCFB 105, [18].
[2023] FWCFB 192
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[38] The default period for the Agreement is extended to 6 December 2024. Orders to give
effect to this decision will be published separately.
[39] The Agreement is published, in accordance with subitem (10A)(c), as an annexure to
this decision.
DEPUTY PRESIDENT
Printed by authority of the Commonwealth Government Printer
AC301276 PR767467
OF THE FAIR WORK L MISSION THE SEA
