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
MRP Trust
(AG2023/4771)
Hospitality industry
DEPUTY PRESIDENT WRIGHT
DEPUTY PRESIDENT GRAYSON
COMMISSIONER THORNTON
SYDNEY, 5 APRIL 2024
Application to extend the default period for Employee Collective Agreement Restaurant Café
Moderno
[1] MRP Trust (Applicant) has made an application under the Fair Work (Transitional
Provisions and Consequential Amendments) Act 2009 (Transitional Act) to extend the default
period for the Employee Collective Agreement Restaurant Café Moderno (Agreement). The
application seeks to extend the default period for the Agreement to 5 December 2027.
[2] The Agreement is a collective agreement that was made under the Workplace Relations
Act 1996 (Cth) (WR Act) and approved under that Act by the Workplace Authority. The
Agreement is a ‘WR Act instrument’ within the meaning of item 2(2) of Schedule 3 of the
Transitional Act. It is classified by item 2(5)(c)(i) of Schedule 3 as a ‘collective agreement-
based transitional instrument’. Agreements of this kind are commonly referred to as ‘zombie
agreements’.
[3] The Transitional Act was amended by the Fair Work Legislation Amendment (Secure
Jobs, Better Pay) Act 2022 (SJBP Act) to provide for the automatic termination of all
remaining transitional instruments. Pursuant to items 20A(1) and (2) of Schedule 3 to the
Transitional Act, the Agreement would have been terminated on 6 December 2023 (the end of
the default period) unless extended by the Commission. The main features of item 20A of
Schedule 3 to the Transitional Act are described in detail in the Full Bench decision in Suncoast
Scaffold Pty Ltd (Suncoast Scaffold).1
[4] Under subitem 20A(6) of Schedule 3, where an application is made under subitem
20A(4) for the default 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), (8), or (9) applies and it is otherwise appropriate in the circumstances
to do so; or
[2024] FWCFB 201
DECISION
AUSTRALIA FairWork Commission
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/
[2024] FWCFB 201
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(b), it is reasonable in the circumstances to do so.
[5] Subitem (7) applies if bargaining for a replacement agreement is occurring. Subitem (8)
relates to individual agreement-based transitional instruments. Subitem (9) applies if the
application relates to a collective agreement-based transitional agreement and it is likely that,
as at the time the application is made, the award covered employees, viewed as a group, would
be better off overall if the agreement continued to apply than if the relevant modern award
applied.
[6] In the application, the Applicant submits that the Agreement should be extended under
subitem (9) as the employees, viewed as a group, would be better off overall under the
Agreement than they would be under the relevant modern award. The Applicant has indicated
that the modern award that covers the employees and will apply to the employees if the
Agreement is terminated is the Restaurant Industry Award 2020 (the Award).
Better Off Overall Analysis
[7] The Commission’s Agreements Analysis Team prepared a written assessment
comparing the conditions in the Agreement with those contained in the Award. 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 Applicant provided a response in writing that has been
considered in reaching this decision.
[8] The Applicant asserts that the employees covered by the Agreement would be better off
overall, largely because of the current composition of the workforce at the Applicant’s business.
The Applicant says that there are ‘two tiers’ of employees engaged in the business, one being
‘mature age’ employees who do not want to work weekends and the other, secondary school or
tertiary students who are only available to work on weekends. The Applicant claims that a
rolled-in hourly rate, inclusive of all penalty and overtime rates, results in the employees being
better off overall because a higher rate of pay ‘equalizes’ wages across the workforce because
‘weekday staff receive no benefit from weekend penalty rates’ and ‘weekend staff receive no
benefit from Public Holidays’.
[9] In addition, the Applicant claims employees will be better off overall under the
Agreement because they receive ‘access to paid meal breaks’, a meal allowance ‘to the value
of $15 on each shift’, and an hourly rate 6% above the modern award. The paid meal break
provided for in the Agreement is more beneficial than the Award. Full-time employees are
entitled to a 30 minute paid break, and part-time employees are entitled to a 10 minute break
after 4 hours of work or a 30 minute break, of which 10 minutes are paid, if they work in excess
of 7.5 hours in a shift. Casual employees have no entitlement to a paid break.
[10] The Agreement is either largely silent on terms and conditions otherwise set out in the
Award or provides for reduced entitlements.
[11] There is no provision for penalty rates in the Agreement. The fixed rates are paid to
employees irrespective of the hours they work. In addition, overtime is payable at an ordinary
[2024] FWCFB 201
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rate without any loading provided for by the Award. No annual leave loading is payable under
the Agreement.
[12] The wage rates in the Agreement fall below the Award and wage increases are payable
at the discretion of the Applicant. The Applicant has advised the Commission that the rates
currently paid to employees are above Award rates, and set out in its submission the rates it
says are actually paid to employees. However, there is nothing to compel the employer to pay
the rates indicated and no information was given to the Commission by the Applicant as to how
the rates are determined.
[13] Other than a meal provision, other allowances payable under the Award are excluded.
The meal break and entitlement to a meal are more beneficial than the Award, however, as set
out above, the amount of paid breaks vary between employees according to the status of their
employment and may not be available to all employees, depending on the hours they are
rostered to work.
[14] The Agreement allows for employees to be rostered to work 38 hours per week, from
Monday to Sunday, averaged over a 12-month period, set in accordance with the demands of
the business. There are no restrictions on how many hours can be worked in a day, the number
of days that can be worked in a week or a requirement for minimum breaks between shifts.
With respect to part-time employees, there are no safeguards with respect to minimum and
maximum engagements, nor any requirement for reasonably predictable hours of work or
guaranteed hours of work.
[15] When attempting to persuade the Commission that, despite the above deficiencies, the
employees are better off under the Agreement, the Applicant refers to the practices in its
workplace and the realities of its current workforce and submits that its part-time and full-time
staff have set rosters, arranged according to the worker’s needs, that are regular and only
changed if an employee needs to alter their working hours.
[16] Regarding the reduced casual loading of 20% under the Agreement, compared with 25%
in the Award, the Applicant says it does not employ casual employees and does not intend to
do so in the future. However, the Applicant suggests that should an extension be granted to the
expiration date of the Agreement, the Commission should grant the extension subject to an
order that the Respondent make payment of 25% casual loading.
Consideration
[17] In Suncoast Scaffold,2 the Full Bench observed that the application of the better off
overall test in subitem (9) of item 20A in Schedule 3 requires 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 adopt the same approach
here.
[18] While full-time employees may be better off overall compared to the Award on account
of receiving a 30 minute paid meal break if engaged to undertake shifts that do not attract
penalty rates under the Award, that falls well short of the requirement in subitem (9) that the
[2024] FWCFB 201
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award covered employees, viewed as a group, be better off overall if the Agreement applied to
them.
[19] Having regard to the lack of shift, weekend, public holiday and overtime rates, leave
loading, reduced casual loading and lack of limits concerning hours of work, the employees,
considered as a group, cannot be considered better off overall under the Agreement compared
to the Award. Therefore, the default period for the Agreement cannot be extended under
subitem 20A(6)(a) and (9) of Schedule 3.
[20] We are also not satisfied that it is ‘reasonable in the circumstances’ to extend the default
period in accordance with subitem 20A(6)(b) of Schedule 3.
[21] In Suncoast Scaffold, the Full Bench described the ‘reasonable’ criterion in item
20A(6)(b) of Sch 3 to the Transitional Act in this way3:
Subitem (6)(b) of item 20A constitutes an independent pathway to the grant of an
extension. 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.
[22] We do not accept the Applicant’s submission on face value, that the current workforce
is composed of a group of employees who do not or cannot work hours that would otherwise
attract penalty rates under the Award, and another group that can only work hours that would
otherwise attract penalty rates, such that a rolled-in rate higher than the Award delivers a benefit
across the workforce. Presenting employees as belonging to only one group or the other seems
to us to be artificial and if it is the reality of this workforce, it is more likely intentionally
structured in this way by the Applicant.
[23] In any event, the submission does not take account of possible future changes to the
composition of the workforce or a likelihood that given the few safeguards around hours of
work, employees may work hours that would otherwise attract penalty rates or overtime rates.
[24] The argument of the Applicant regarding equalizing rates pay across the workforce does
not persuade us that it is otherwise reasonable in the circumstances to extend the default period
of the Agreement.
[25] The Full Bench has noted that the purpose of sunsetting zombie agreements as provided
by the SJBP Act is to replace them with contemporary instruments made under the Fair Work
Act 20094. It is not reasonable in this case to extend the default period of the Agreement because
it does not contain contemporary terms and if employees remained covered by its outdated
terms, they would not be better off overall than if the Award applied to them.
[26] As our decision is to refuse to extend the default period under subitem 20A(6) of
Schedule 3 and our decision is made after the sunset date in the Transitional Act, subitem
20A(11) provides that we must extend the default period to the day of this decision or specify
a day that is not more than 14 days after the day of this decision. We have decided that to enable
[2024] FWCFB 201
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the parties to make the necessary administrative arrangements to give effect to the sunsetting
of the Agreement the default period is extended to 12 April 2024.
[27] The application is dismissed.
DEPUTY PRESIDENT
Printed by authority of the Commonwealth Government Printer
AC309208 PR773230
1 [2023] FWCFB 105 at [3] to [18].
2 [2023] FWCFB 105.
3 Ibid at [17]
4 See for example, see Quinn Transport Pty Ltd Enterprise Agreement 2009 [2023] FWCFB 195 at [23]
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/2023fwcfb105.pdf
https://www.fwc.gov.au/documents/decisionssigned/pdf/2023fwcfb195.pdf
