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Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
Sch. 7, Item 30(4) - Application to extend default period for enterprise agreements made
during the bridging period
S.C. Heinrich & Co Pty Ltd
(AG2023/2895)
DEPUTY PRESIDENT WRIGHT
DEPUTY PRESIDENT ROBERTS
DEPUTY PRESIDENT SLEVIN
SYDNEY, 10 NOVEMBER 2023
Application to extend the default period for the SC Heinrich & Co Pty Ltd Heavy Vehicle and
Construction &Maintenance Agreement 2009
[1] S.C. Heinrich & Co Pty Ltd (the Applicant) has applied under item 20A(4) of Schedule
3 to the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth)
(Transitional Act) to extend the default period for the SC Heinrich & Co Pty Ltd Heavy Vehicle
and Construction &Maintenance Agreement 2009 (Agreement) for a period of four years.
[2] The Agreement was made during the ‘bridging period’ as defined1 in the Transitional
Act and approved under the Fair Work Act 2009 (Cth) (FW Act) on 2 February 2010.
Applications for the extension of agreements made during the bridging period are required to
be made under item 30(4) of Sch 7 of the Transitional Act. We propose to treat the application
as if it had been made under that item.
[3] Agreements made during the bridging period are one of a number of types of agreement
that are commonly referred to as zombie agreements. The main aspects of the statutory
framework for applications for the extension of the default period for zombie agreements were
detailed in the Full Bench decision in Suncoast Scaffold Pty Ltd.2 The Full Bench there dealt
with an application to extend a ‘WR Act agreement’ under item 20A of Sch 3 to the Transitional
Act. The terms of item 20A of Sch 3 are relevantly the same as item 30 of Sch 7. The Full
Bench’s analysis of those provisions applies equally to item 30 of Sch 7. It is not necessary to
repeat that analysis here.
[4] The Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth) (SJBP
Act) amended the Transitional Act to include item 30 in Sch 7. Item 30 provides for the
sunsetting of any remaining enterprise agreements made during the bridging period on 6
December 2023 unless that deadline is extended by the Commission. Subitem 30(6) provides
that where an application is made under subitem 30(4) for the period to be extended, the
Commission must extend the default period for a period of no more than four years if either:
a) subitem (7) or (8) applies and it is otherwise appropriate in the circumstances to do
[2023] FWCFB 203
DECISION
AUSTRALIA FairWork Commission
https://www.fwc.gov.au/documents/decisionssigned/pdf/2023fwcfb203.pdf
[2023] FWCFB 203
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so; or
b) it is reasonable in the circumstances to do so.
[5] Subitem (7) applies where the application is made at or after the notification time for a
proposed enterprise agreement that will cover the employees and bargaining for the proposed
enterprise agreement is occurring. No reliance was placed on this subitem by the Applicant.
[6] The present application was advanced on the basis that subitem (8) applies. This subitem
applies if it is likely that as at the time the application is made, the relevant employees covered
by the Agreement, viewed as a group, would be better off overall if the Agreement applied to
the employees than if the relevant modern award referred to in subitem (9) applied. The relevant
modern awards in this case are the Road Transport and Distribution Award 2020 (Transport
Award), the Building and Construction General On-site Award 2020 (Construction Award),
the Cement, Lime and Quarrying Award 2020 (Quarrying Award) and the Manufacturing and
Associated Industries and Occupations Award 2020 (Manufacturing Award).
The Agreement
[7] Clause 9 of the Agreement, Rates of Pay, sets out a table of rates of pay that applies to
various classifications covered by the Agreement. Those rates are described as Base Rates,
which are in turn broken down into a Base Weekly Agreement Rate and a Base Hourly Rate
and Local Agreement Flat Hourly Rates. The Base Rates reflect the relevant base award rates
at the time the Agreement was made.
[8] Clause 9.2 of the Agreement provides as follows:
9.2 The Agreement Rates of pay set out in the table in clause 9.1 are based on 38 Ordinary
Hours per week and include payment for Overtime. However for ease of calculation,
the Company shall provide the employees an Agreement Flat Hourly rate which shall
be paid for each hour worked up to 63 hours per week.
9.2.1 The employees shall be paid a Flat Hourly Rate that is at least equal the (sic) Local
Agreement Flat Hourly rates of pay as set out in the table in clause 9.1 for the
employee’s classification level.
[9] Clause 6, No Further Claims, provides in part:
6.2 If the Base Weekly and Base Hourly rates of pay set out in the table in clause 9.1 are
adjusted from time to time through Federal Minimum Wage Increases such that they
exceed the rates payable under this Agreement, then the rates payable under this
Agreement shall be increased to match these rates.
[10] Clauses in similar terms to those set out above have been considered in two recent
matters relating to applications to extend the default period for agreements applying in the
transport industry in South Australia.3 In both of those matters the Full Bench noted the lack of
clarity in the terms of the agreements in relation to the rates of pay that are actually payable
under the agreements and the mechanism for adjusting those rates over time. A similar difficulty
arises here.
[2023] FWCFB 203
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[11] The Applicant submitted that the method of calculating the rates payable was presented
to the Commission when the Agreement was submitted for approval. They said the method was
based on a calculation of hours typically worked each day, Monday to Saturday, up to a
maximum of 63 hours per week and taking into account overtime penalties that would apply to
those hours under the respective awards. Under this method, the number of hours worked (63)
is expressed as the number of hours payable at the ordinary time rate (in this case 82 hours)
which is then multiplied by the award hourly rate. The payment of a meal allowance is included4
and the resultant total amount is divided by 63 to produce the Flat Hourly Rate referred to in
clause 9.1. The Applicant provided the Commission with a spreadsheet setting out this
methodology and taking into account award increases to demonstrate the current rate payable
under the Agreement for the Level 8 transport classification. As can be seen from clause 9.2
above, the details of this methodology are not contained in the text of the Agreement itself.
[12] The Applicant also submitted that the rates of pay payable under the Agreement had
been adjusted throughout the life of the Agreement in response to Annual Wage Review
decisions. We presume that clause 6.2 referred to above is relied upon to bring about this
adjustment. Clause 6.2 is, in our view, ambiguous. However, we are prepared to assume the
view as to the effect of the clause as advanced by the Applicant, that is that the methodology
described in the preceding paragraph is applied to the award rates as those rates are adjusted
from time to time, to produce the Flat Hourly rates payable under clause 9.1 of the Agreement.
[13] The Applicant provided a table setting out the current award rates and Flat Hourly Rates
payable under the Agreement for each relevant employee classification. The table also included
the rates that were in fact being paid to those classifications which in each case exceeded both
the award rates and the Flat Hourly Rates. We note that the Flat Hourly Rates in this document
were different to the Flat Hourly Rates that the Applicant included in the application as being
the rates currently payable under the Agreement. This was later explained as being the result of
the use of an outdated amount for the meal allowances being included in the table of rates
provided.
Better Off Overall Analysis
[14] The Commission’s Agreements Analysis Team prepared a written assessment of the
Agreement for the purpose of comparing the wages and entitlements in the Agreement with
those contained in the relevant awards. A copy of this analysis was provided to the Applicant
who was given an opportunity to make further comments or submissions about the analysis.
The analysis adopted the approach described above to determine the amounts currently payable
to the various classifications under the Agreement.
[15] The Agreements Analysis Team modelling was based on initial information provided
by the Applicant that drivers and operators under the Agreement typically worked 12 hours per
day, up to 6 days per week and that mechanics typically worked an average of 10 hours per day,
up to 5 days per week. That modelling demonstrated that drivers and machine operators in
construction and quarrying classifications were not better off under the Agreement by amounts
of between $149.83 per week to $155.02 per week. However, mechanics were better off by
$212.66 per week. The Applicant subsequently advised that employees typically worked 11.5
hours on 3 days of the week, 11 hours on 2 days and 6.5 hours on Saturdays (i.e. 63 hours per
[2023] FWCFB 203
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week). On this work pattern, the modelling shows that in the case of drivers, they would be
$31.13 per week better off under the Agreement and in the case of operators in construction
and quarrying they would be $39.58 and $44.74 per week respectively better off under the
Agreement. In the case of mechanics, the modelling shows that they would be $245.26 per week
better off under the Agreement although we note the Applicant’s advice at the directions hearing
that mechanics typically worked shorter hours than the other classifications.
[16] In relation to casual employees, the Applicant said that these employees were engaged
occasionally under the Transport Award. At the directions hearing it was accepted that the
Applicant employed a small number of casual employees. The Applicant argued that these
employees were better off under the terms of the Agreement since they received the Flat Hourly
Rates in addition to the specified loadings for ordinary hours and overtime. While it may be the
case that casuals receive the payment of the Flat Hourly Rates as a matter of practice, we do
not accept that the Agreement provides for this payment. Clause 9.7 clearly provides for
payment at the base rates of pay only. We therefore regard the provisions of the Agreement
relating to casuals as a neutral consideration in the overall assessment.
[17] The public holiday provisions are set out in clause 17 of the Agreement. The clause
provides for the payment of public holidays not worked at the base rate. When an employee
works on a public holiday, they receive either a payment for the day at the base rate and paid
time off on an hour for hour basis, or an additional amount at the rate of either 150% or 200%
of the base rate, depending on the public holiday worked. The Applicant submitted that the
provisions were equivalent to those provided for in the awards.
[18] In our view that submission does not pay adequate regard to a number of differences
between the Agreement provisions and those of the relevant awards. First, the Transport Award
provides for an additional penalty of 250% and 300% for time worked outside ordinary hours
on public holidays and for casual employees working on public holidays. The Construction
Award and the Quarrying Award provide a 275% penalty for casual employees. Second, the
Manufacturing Award provides for a minimum payment of 3 hours for time worked on a public
holiday. The Agreement provides for payment for hours worked only. Third, the Agreement
provides for paid time off on an hour for hour basis as an alternative to the additional payment
at penalty rates. In that case employees would receive payment effectively at single time for
time worked on a public holiday. Overall, we consider the Agreement provisions relating to
public holidays inferior to the equivalent provisions in the awards.
[19] Clause 18.3 of the Agreement provides:
18.3 The employee shall be paid any unused accrued annual leave when their
employment ceases, provided that they have had at least one month of continuous
service and that they were not dismissed as a result of their behaviour or performance
before completing 12 months continuous service. Leave loading is not payable on
unused Annual Leave entitlements when they are paid out at the end of the employees’
employment.
[20] The awards do not include the above limitations on payment of accrued and untaken
annual leave. Moreover, the Transport Award and the Construction Award expressly provide
for the payment of leave loading on accrued annual leave paid on termination of employment.
[2023] FWCFB 203
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[21] Under clause 18.5 the company may require an employee to take some, or all, of their
accrued annual leave with 14 days’ notice. Each of the awards include clauses5 relating to
employer directions to take leave which include various safeguards for employees such as
minimum remaining accrued leave entitlements and minimum periods of leave to be taken. We
regard the annual leave provisions of the Agreement as being less beneficial than the equivalent
provisions in the awards. The Applicant sought to provide an undertaking to the Commission
to address any shortcomings in the annual leave clause of the Agreement. The Transitional Act
does not make any provision for the acceptance of undertakings for the purposes of applications
to extend a default period. We do not take this undertaking into account in our assessment of
the Agreement.
[22] We also note that the Transport, Manufacturing and Quarrying Awards include
provisions that ensure that where an employee leaves during a redundancy notice period the
employee is entitled to receive the redundancy entitlements (but not payment for the remainder
of the notice period itself) that they would have received had they remained in employment
until the expiry of the notice period. 6 The Agreement does not include a similar clause. Further,
those employed in construction classifications also do not have the benefit of the industry
specific redundancy scheme in clause 41 of the Construction Award. That clause, which was
developed to deal with the particular circumstances of those covered by the Construction
Award, contains a much broader definition of redundancy7 than is contained in the Agreement
and an entitlement to payment for those with less than 12 months service where the redundancy
as defined is occasioned otherwise than by the employee.8
[23] Clause 10.3 of the Agreement provides that the meal allowance is included in the Flat
Hourly Rate, but otherwise there are no separately identifiable allowances referred to in the
Agreement. We note however that clause 2 of the Agreement incorporates the terms of a former
federal award and a number of state awards preserved as Notional Agreements Preserving a
State Award.9 Those awards include allowances. However, given that the federal award no
longer applies, there can be no allowances from that award incorporated into the Agreement.
Consequently, employees of the Applicant who would qualify for allowances under clause 19
of the Transport Award would not receive those allowances under the Agreement.
Consideration
[24] In Suncoast Scaffolding the Full Bench observed that the application of the better off
overall test in Item 9 of Item 20A in Schedule 3 required a broad evaluative judgment 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. We apply the same approach
here.
[25] Having regard to the various matters set out above, we regard the question of whether
the employees, viewed as a group, are better off overall if the Agreement applied than if the
relevant awards applied to be relatively finely balanced, but only if the assumptions about the
actual rates payable under the Agreement are accepted. With those assumptions in place, the
weekly rates of pay payable under the Agreement for the various categories of employees are,
in the case of a 63-hour working week, higher in the case of mechanics, and slightly higher for
the other categories, than the comparable award rates. We note however that the modelling
[2023] FWCFB 203
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shows that any advantage, for drivers and operators at least, is reversed where the hours increase
up to the 12 hours per day as considered in the initial analysis. In this respect we note the
Applicant’s original advice that some drivers and operators typically worked beyond 63 hours
per week. Against any benefit that exists under the Agreement relating to rates of pay, there are
clearly other terms in the Agreement that are inferior to the corresponding terms in the awards.
[26] On balance, we are of the view that it is likely that as at the time the application is made,
the relevant employees covered by the Agreement, viewed as a group, would be better off
overall if the Agreement applied to the employees than if the relevant modern awards applied.
However, this is not a case where the employees are very obviously better off or better off by a
significant margin. Overall, we think any additional benefit provided by the Agreement is
minor and variable depending on the circumstances and patterns of work of the employees.
[27] We then turn to consider whether it is otherwise appropriate in the circumstances to
extend the default period for this agreement. We observe that a number of Full Bench
decisions10 have now pointed to the default position of the statutory scheme to automatically
terminate transitional instruments on 6 December 2023 as suggesting a policy preference for
employees covered by transitional instruments to be regulated by contemporary instruments
made under the FW Act. In this case, the Agreement presents similar issues to those considered
in both Quinn Transport and J.A. Tilley. This Agreement is over 13 years old. It lacks clarity,
particularly in relation to the determination of the actual rates of pay that are payable according
to its terms. The methodology for determining those rates and the adjustment of them over time
does not appear on the face of the Agreement. That difficulty was highlighted by the different
information in the Applicant’s own material as to the current rates payable under the
Agreement. It is undesirable, in our view, for that type of uncertainty to continue.
[27] We note that the Applicant seeks an extension for the maximum period of four years.
There was no evidence of any proposal to transition to a contemporary industrial instrument.
[28] We also observe that there was no evidence from any of the employees covered by the
Agreement as to whether they supported any extension of the Agreement. There was also a
submission by the Applicant that the rates that are actually paid to the employees exceed those
provided for by the Agreement. In other words, the terms of the Agreement relating to wage
rates are not consistent with the present circumstances of the employees covered by it. We
consider it unlikely in circumstances where the employer is seeking the maximum extension to
an agreement, and is presently paying in excess of what the agreement provides for, that the
sunsetting of the Agreement would result in employees being actually worse off because the
employer would revert to the relevant awards.
[29] In all the circumstances we consider it appropriate that the parties consider negotiating
a new agreement under the terms of the FW Act that is in clear terms, is underpinned by the
relevant modern awards, and which reflects the existing situation of the employer and its
employees. We do not consider it to be otherwise appropriate to extend the default period in
this case.
[30] There were no reasons advanced as to why it would be reasonable in the circumstances
to extend the default period of this agreement and we are unable to identify any such reasons.
[2023] FWCFB 203
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[31] The application to extend the default period is dismissed.
DEPUTY PRESIDENT
Printed by authority of the Commonwealth Government Printer
PR768036
1 Item 2, Part 1 of Schedule 1.
2 [2023] FWCFB 105.
3 Application by Quinn Transport Pty Ltd T/A Quinn Transport Pty Ltd [2023] FWCFB 195; Application by DW & JA Tilley
PTY LTD [2023] FWCFB 196.
4 SC Heinrich & Co Pty Ltd Heavy Vehicle and Construction &Maintenance Agreement 2009 Clause 10.1.
5 Road Transport and Distribution Award 2020 [MA000038] Clause 24.7; Building and Construction General On-site Award
2020 [MA000020] Clause 31.7, Cement, Lime and Quarrying Award 2020 [MA000055] Clause 22.6; Manufacturing and
Associated Industries and Occupations Award 2020 [MA000010] Clause 34.9.
6 Road Transport and Distribution Award 2020 [MA000038] Clause 31.2; Manufacturing and Associated Industries and
Occupations Award 2020 [MA000010] Clause 46.2; Cement, Lime and Quarrying Award 2020 [MA000055] Clause
32.2.
7 Building and Construction General On-site Award 2020 [MA000020] Clause 41.
8 Ibid Clause 41.3.
9 Referred to at items 2(2)(b) and 20(1) of Sch 3 to the Transitional Act.
10 For example [2023] FWCFB 137, at [32].
OF THE FAIR WORK L MISSION THE SEA
https://www.fwc.gov.au/documents/decisionssigned/pdf/2023fwcfb105.pdf
https://www.fwc.gov.au/documents/decisionssigned/pdf/2023fwcfb195.pdf
https://www.fwc.gov.au/documents/decisionssigned/pdf/2023fwcfb196.pdf
https://www.fwc.gov.au/documents/decisionssigned/pdf/2023fwcfb137.pdf
