1
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
Kalfresh Management Services Pty Ltd & Kallium Management Services
Pty Ltd as Trustee for the Kalium Labour Trust t/a Kalfresh Pty Ltd
(AG2023/3764)
KALFRESH MANAGEMENT SERVICES PTY LTD COLLECTIVE
WORKPLACE AGREEMENT 2007 & KALLIUM MANAGEMENT
SERVICES PTY LTD COLLECTIVE WORKPLACE AGREEMENT
2007
Gardening services
DEPUTY PRESIDENT WRIGHT
DEPUTY PRESIDENT ROBERTS
DEPUTY PRESIDENT SLEVIN
SYDNEY, 21 NOVEMBER 2023
Application to extend the default period for Kalfresh Management Services Pty Ltd Collective
Workplace Agreement 2007 & Kallium Management Services Pty Ltd Collective Workplace
Agreement 2007
[1] Kalfresh Management Services Pty Ltd (Kalfresh) and Kallium Management Services
Pty Ltd have applied to extend the default period for the Kalfresh Management Services Pty
Ltd Collective Workplace Agreement 2007 (Kalfresh Agreement) and the Kallium
Management Services Pty Ltd Collective Workplace Agreement 2007 (Kallium Agreement)
(collectively, the Agreements).
[2] The application was made pursuant to item 26A(4) of Sch 3A to the Fair Work
(Transitional Provisions and Consequential Amendments) Act 2009 (Cth) (Transitional Act).
That item applies to Division 2B State employment agreements.1 However, the Agreements
were made under the Workplace Relations Act 1996 (Cth). They are agreement-based
transitional instruments to which item 20A of Sch 3 to the Transitional Act applies. We
propose to deal with the application on the basis that it is made under item 20A(4) of Sch 3 of
the Transitional Act.
1 See item 5 of Sch 3A to the Transitional Act.
[2023 FWCFB 217
DECISION
AUSTRALIA FairWork Commission
[2023 FWCFB 217
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[3] The application seeks to extend the default period of the Agreements until 30 June
2024.
[4] 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 that period for up
to four years in prescribed circumstances. The agreements to which these provisions apply are
commonly known as zombie agreements. The main features of item 20A of Sch 3 are
described in detail in the Full Bench decision in Suncoast Scaffold Pty Ltd.2
[5] Relevantly, 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)(a) to extend the default period
if the Commission is satisfied that subitem (7), (8) or (9) applies and it is otherwise
appropriate in the circumstances to do so. Alternatively, the Commission must extend the
default period under subitem 6(b) where it is satisfied that it is reasonable in the
circumstances to do so.
[6] The Applicants did not contend that any of subitems (7), (8) or (9) applied to the
present circumstances. They confirmed that formal bargaining processes had not commenced
before the application was made. In that case, subitem (7) has no application. Nor does sub-
item (8) apply since it relates to individual agreement-based transitional instruments only.
Subitem (9) relates to circumstances where, at the time the application is made, it is likely that
the employees viewed as a group would be better off overall if the agreements applied to them
than if the relevant modern award3 applied. The Applicants confirmed that there were no
terms in the Agreements that were more beneficial than the relevant award and a number of
terms that were clearly less beneficial, although they said as a matter of practice rather than
because of the terms of the Agreements, it was possible for pieceworkers to be paid more than
they would receive under the relevant award. We do not consider that subitem (9) applies
here.
[7] We therefore turn consider whether we can be satisfied that it is reasonable in the
circumstances to extend the default period of the Agreements under subitem 6(b).
Background and Submissions
[8] The Applicants are Queensland-based vegetable production companies. Their business
operations vary according to seasonal conditions. There is a seasonal downturn in the months
from June to September. Peak harvest season commences in October. The workforces
engaged under the Agreements consist of some permanent staff but are largely made up of
casual employees engaged during peak harvesting periods. In those periods, employees work
from 6pm to 2am Monday to Friday and 6am to 6pm on Saturdays.
[9] The Applicants submitted that although bargaining had not formally commenced for
replacement agreements, they did propose to negotiate a new agreement and had taken some
preliminary steps to do so. They said they expected negotiations for a new agreement to be
complex and to potentially involve employees covered by multiple awards. They said they
wanted to give their workforce the ability to bargain in a stable environment and without the
2 [2023] FWCFB 105.
3 Horticulture Award 2020 [MA000028].
[2023 FWCFB 217
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‘duress’ of time constraints and a potential loss of earnings. Further, the Applicants said that
the sunsetting of the Agreements during peak season would mean that the employment
arrangements would no longer be underpinned by the pay and piece rate schedules that
employees were engaged under and that employees would feel confused by this and believe
they were being disadvantaged. The Applicants said that the sunsetting of the Agreements
could cause disruption to the workforce and that any loss of workforce numbers during the
peak season could impact on the viability of the business.
[10] The Applicants submitted that if they were to revert to the Horticulture Award during
peak season, they would be limited to the payment of 38 ordinary hours per week to each
employee and that they would have to increase their workforces by at least 30% to cover the
additional volume of work that would be paid at ordinary time rates. They said that this
increase in workforce numbers would place a strain on local resources and services in the
regional areas where they operated. The Applicants said the extension application was
supported by their employees.
Consideration
[11] In Suncoast Scaffold Pty Ltd the Full Bench said:
[17] The ‘reasonable’ criterion in the subitem should, in our view, be applied in
accordance with the ordinary meaning of the word – that is, “agreeable to reason or
sound judgment”. Reasonableness must be assessed by reference to the circumstances
of the case, that is, the relevant matters and conditions accompanying the case. Again,
a broad evaluative judgment is required to be made.
[12] Both agreements were made and approved in 2007. They are expressed as stand-alone
instruments that replace all award conditions. Under schedule 3 of each agreement, the
conditions of employment that are ‘pertinent’ are limited to the small number that are
included in the agreements themselves and those in ‘other common law documentation’. The
following award conditions, amongst others, are expressly excluded:
(i) ordinary time hours of work, rest breaks, notice periods and variations to
working hours;
(ii) incentive-based payments and bonuses;
(iii) annual leave loadings
(iv) observance of days declared as public holidays;
(v) monetary allowances, including expense, skills and disability-related
allowances;
(vi) loadings for overtime and shift work;
(vii) penalty rates; and
(vii) redundancy pay.
[2023 FWCFB 217
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[13] The Agreements provide for the payment of a 20% loading to casual employees,
although the Applicants said that as a matter of practice, a 25 % loading is paid, consistent
with the loading provided in the Horticulture Award.
[14] The Transitional Act provides that the base rates of pay payable under agreement-
based transitional instruments are not to be less than the base rates payable under a modern
award that is in operation and covers an employee.4 However, the inferior conditions of the
Agreements in this case do not reflect the safety net standards provided for by the Fair Work
Act 2009 (Cth) (Act) and modern awards made under the Act. They are the product of a
legislative scheme that has long since been superseded. As has been mentioned in other
matters5, the default position of the current statutory scheme to automatically terminate
transitional instruments on 6 December 2023 suggests a policy preference for employees
covered by transitional instruments to be regulated by contemporary instruments made under
the Act. The inferior and outdated terms and conditions in these agreements provide a sound
reason why extending the life of the Agreements would not be desirable. Those inferior
conditions weigh strongly against a conclusion that it is reasonable in the circumstances to
extend the default periods.
[15] The Applicants’ submissions that the sunsetting of the Agreements will create a
bargaining environment of duress for employees or a potential loss of earnings is not
persuasive. Given the inferior conditions in these agreements, we think it unlikely that there
would be a disadvantage to employees in a reversion to award conditions prior to the
finalisation of a new agreement. Nor do we consider that there would likely be a reduction in
workforce numbers and any consequential adverse impact on business viability that it was
suggested such a reduction might cause. The Applicants’ own submissions suggest the
opposite, that is, if the Award applied, further employees would be required to cover the
additional volume of work during peak season.
[16] In Qualipac6 the Full Bench rejected an application for an extension of the default
period in circumstances where an applicant wanted to continue to rely on the inferior rates and
conditions in a zombie agreement. There are some parallels with the present case. The Bench
in Qualipac said:
Qualipac’s application is essentially that it would like to continue to pay its employees
rates that are lower than the Award for one more season. No suggestion is made that
the better off overall test is met. The Agreement provides for a 23% casual loading.
The casual loading in the Award is 25%. The Agreement makes provision for
additional hours to be paid at ordinary rates where such hours are requested to be
worked by employees. Overtime in the Agreement is otherwise paid at time and a half.
Under the Award overtime for casual employees is 175% of the ordinary rate inclusive
of the casual loading. Qualipac’s submissions are to the effect that should the overtime
provisions of the Award apply there would be an additional wage cost for the work
performed. We understand that to be the difference between paying its casual
employees a 25% loading instead of a 23% loading for ordinary hours and 175% of
the ordinary rate rather than 123% for the overtime they work.7
4 Item 13 schedule 9.
5 [2023] FWCFB 137, [34].
6 [2023] FWCFB 212.
7Ibid at [17].
[2023 FWCFB 217
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[17] We also think the circumstances here can be distinguished from those in Tinmarl Pty
Ltd.8 There the Commission extended the default period for a zombie agreement at a mango
farm where the applicant had a predominately seasonal workforce, many of whom resided in
the Pacific Islands. Those workers were engaged under a seasonal worker program. The
seasonal worker program required the employer to make offers of employment underpinned
by an industrial instrument that applied for the duration of the employment. Those offers had
to be made in August 2023. The workers employed under the scheme were not available to
bargain for a replacement enterprise agreement before the automatic termination of the
Agreement on 6 December. Timarl sought an extension to enable it to make offers of
employment in accordance with the seasonal worker program. These were relevant factors in
assessing the reasonableness of the application. There was no evidence or submissions about
comparable circumstances in this case.
[18] We have taken into account the material relating to the steps that have been taken as a
precursor to bargaining and noted that although the Applicants have been exploring their
bargaining options internally since March 2023, formal bargaining processes have not yet
commenced.
[19] On balance, we are not satisfied that it is reasonable in the circumstances to extend the
default period of either agreement. The Application is dismissed.
DEPUTY PRESIDENT
Printed by authority of the Commonwealth Government Printer
PR768504
8 [2023] FWCFB 124.
OF THE FAIR WORK L MISSION THE SEA
