[2010] FWA 6442

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FAIR WORK AUSTRALIA

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

Top End Consulting Pty Ltd
(AG2010/11622)

DEPUTY PRESIDENT BARTEL

ADELAIDE, 24 AUGUST 2010

Application for approval of the Top End Consulting Enterprise Agreement 2010

[1] An application for approval of an enterprise agreement known as the Top End Consulting Enterprise Agreement 2010 (the Agreement) has been made by Top End Consulting Pty Ltd (the employer or Top End Consulting). The application has been made pursuant to s.185 of the Fair Work Act 2009 (the FW Act) and is a single enterprise agreement.

[2] The Agreement is binding on the employer and its employees “… who are engaged to provide labour to one of the employer’s clients as designated by the employer from time to time.” 1 As is apparent, the employer is a labour hire company. It operates in the Northern Territory and in Western Australia, providing labour to a number of workplaces in industries which the employer describes as seasonal industries. The reference instruments that apply to the employees bound by the Agreement are identified in the Form F17 Employer Declaration as set out below.

[3] The Agreement was lodged on 6 July 2010 and I forwarded a statement to the employer dated 19 July 2010 outlining my Preliminary Findings. In that statement I indicated that I had concerns that the Agreement did not pass the Better Off Overall Test, and in particular that:

[4] I also indicated that the details of the terms and conditions in the reference instrument(s) that are less beneficial to employees than the terms of the Agreement, and the identification of the employees affected, was required in order to make an assessment as to whether the employees are better off overall.

[5] The relevant voluntary hours provisions in the Agreement are as follows:

[6] The provisions in the reference instruments detailing penalty payments for work performed outside ordinary hours on Monday to Friday, for overtime on Saturdays and Sundays and for work performed on public holidays are variable but are generally in the order of time and a half or double time. If ordinary hours are performed on a Saturday or Sunday under the Hospitality Industry (General) Award 2010 a penalty payment of 25% or 75% respectively, applies.

[7] Prior to the approval hearing on 26 July 2010, the employer provided written submissions; a statement from Edward Karras, Director of Top End Consulting; a statement from Sheree Taylor, an employee of the employer who will be bound by the Agreement; and undertakings 2 pursuant to s.190 of the FW Act. The undertakings were directed to the issues set out in the first two dot points in [3], above.

The evidence 3

[8] The employer provides labour to various businesses in the Kimberley region of Western Australia and in the Northern Territory. In Kununurra, the employer supplies labour to a café, a hardware store, sandalwood plantations and a maintenance company. In Darwin, labour is supplied to farms for the packing and distribution of mangoes, to Independent Grocers – Metcash, and for various festivals, race days and other events. Labour is also supplied to the mango industry in Katherine in the Northern Territory.

[9] By way of example of the seasonality of work, Mr Karras stated that the peak season for mangos this year is between October and December, and in this period there are many hours available whereas outside this period there is little, if any work available.

[10] Mr Karras described his employees as itinerant workers who are usually travelling around Australia. He stated that they usually only stay in town for a short period of time and are keen to maximise their income.

[11] Mr Karras stated that the purpose of the Agreement was “… to allow the business to offer additional hours to our workforce if those employees wish to perform such hours … to maximise their income while there is work available during peak times so that they may earn sufficient income to cover themselves … [when] there may not be work available.”  4 He said that the employer could not pass on the costs of penalty payments to the client.

[12] This was supported by Barry Albrecht, Director of Arnhem Mangoes, who provided a statement that he engages labour through Top End Consulting during the peak season when there is a significant increase in the hours available. He stated that the profit margin for the business would “simply evaporate” if he had to pay the penalty rates prescribed in the award. 5

[13] Ms Taylor is employed in the Sandalwood Café in Kununurra. The café is only open in the dry season, which is 6 months of the year and this coincides with the peak season for agriculture in the region. Her written statement said that she tries to work as many hours as possible in the dry season to maximise her earnings and that when the wet season arrives she will probably have to look for work in another town.

[14] Ms Taylor confirmed that she understood the penalty provisions in the relevant award but that she would rather voluntarily perform additional hours without penalty rates for overtime than not work extra hours at all.

[15] Ms Taylor was available by phone in the hearing and in answer to questions about her work and circumstances she advised that she was the only employee at the café who was employed by Top End Consulting and she currently works between 30 and 40 hours per week. The café trades on 7 days of the week but she only works Monday to Friday. Weekend work is sometimes performed by the direct employees of the café but more often by the person who is the lessee of the café. She stated that she is travelling around Australia. She has been working at the café for four and a half months and would be staying in Kununurra for about another 12 months before continuing her travels.

The submissions

[16] Leave was granted for the employer to be represented by Mr Mossman of counsel. His primary submission was that the Agreement passed the Better Off Overall Test. Section 193(1) of the FW Act relevantly provides that:

[17] Mr Mossman relied on a number of decisions of this Tribunal and the Australian Industrial Relations Commission in support of his primary position. Firstly, he submitted that the fact that an agreement contains a voluntary hours provision does not, in itself, mean that an agreement will not pass the no disadvantage test. 6 Secondly, it was put that evidence about the working arrangements and employees’ views about the voluntary hours provisions were relevant in assessing whether the agreement passed the appropriate test.7 Thirdly, the determination of whether an agreement passes the no disadvantage test was said to be a matter of evidence of substantive exchanges between the award and the agreement, and this is not necessarily limited to monetary comparisons. It can include benefits provided to employees by the inclusion of a voluntary hours provision which enables them to earn more than they could under the relevant award because there are no or negligible hours available that would be paid at overtime rates.8

[18] Mr Mossman referred to the approval of the International Workforce Pty Ltd Enterprise Agreement 2009 9 (International Workforce), which was said to be in similar terms to the Agreement. He concluded his submission by referring to the evidence of Ms Taylor and Mr Karras and submitted that this evidence was consistent with the evidence that supported the approval of the agreement in Fanoka, which similarly contained voluntary hours provisions.

Consideration - Does the Agreement pass the Better Off Overall Test?

[19] The information provided in the employer’s documentation and Mr Mossman’s submissions identify the following terms of the Agreement as more beneficial than the terms of the reference instruments:

[20] I do not discern that any of the reference instruments contain a more beneficial span of hours. As noted above, penalty payments for ordinary hours on a Saturday or Sunday under the Agreement are more beneficial than the equivalent provisions in the Hospitality Industry (General) Award 2010. In other cases the reference instruments prescribe penalty payments for ordinary hours on weekends which equal or exceed those under the Agreement. The increase in rates is minimal and there is no evidence that the majority of employees would benefit from increased rates of pay. I am however satisfied that the overtime payments prescribed in the Agreement for overtime that the employer requires are more beneficial than the terms of the relevant instruments.

[21] The decisions referred to by Mr Mossman concern the assessment of an agreement against the no-disadvantage test, because they relate to agreements made during the bridging period as defined in the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009. The no-disadvantage test is in the following terms:

[22] International Workforce is a labour hire company and its agreement has voluntary hours provisions in similar terms to those contained in the Agreement. The weight that may otherwise attach to International Workforce because of that commonality is diminished because the no-disadvantage test is a lower test than that the Better Off Overall Test which requires that employees must be positively better off. In addition, the reference instruments in International Workforce are not specified and cannot be assumed to be the same as in the present matter.

[23] A Full Bench of Fair Work Australia has recently considered voluntary hours clauses in the decision of Bupa Care Services Pty Ltd v P & A Securities Pty Ltd as trustee for the D’Agostino Family Trust T/as Michel’s Patisserie Murwillumbah and others  11 (Bupa). The agreement in Bupa was also made in the bridging period and the relevant test was the no-disadvantage test.

[24] The Full Bench in Bupa affirmed the decision of the majority in Re MSA Security Officers Certified Agreement [2003] 12 (the Security Officers case). The details of that decision are set out at some length in Bupa and will not be restated here. For present purposes it is sufficient to note that the Full Bench confirmed that the no-disadvantage test is to be assessed by a comparison of the terms of the Agreement as against the terms of the reference instrument(s) and that the effect that the terms and conditions may have on the actions of the employer or employee is not relevant to that assessment.13

[25] Mr Mossman argued that Fanoka reflects the reasoning in Bupa because both decisions rely on the Security Officers Case. In my view that submission cannot be sustained. Fanoka was issued prior to the decision in Bupa. His Honour Senior Deputy President Richards adopted a different approach to the assessment of the no-disadvantage test and considered the impact of the voluntary hours provision by reference to a comparison of employees’ income if they worked voluntary hours under the relevant agreement as compared to their current income under the reference instrument, which did not include any overtime. 14

[26] The Better Off Overall Test is in slightly different terms to the no-disadvantage test in that the comparative assessment to be undertaken is not described by reference to the terms and conditions specified in an agreement and the reference instrument(s), but by reference to whether the employee would be better off overall under the agreement than the reference instrument(s). Notwithstanding this change in the wording, I am satisfied that the proper approach to the Better Off Overall Test also requires that reference be made to the terms and conditions of the relevant instruments, for the following reasons. Part 3 of the Form F17 Employer Declaration deals with comparison data and seeks information on the terms and conditions of the agreement and of the relevant reference instruments. The explanatory note at the commencement of Part 3 is as follows:

[27] There is nothing in s.193 to suggest that the Better Off Overall Test is to be assessed by matters extraneous to the terms and conditions of the relevant instruments. The test still requires that the status of the employees as better off overall, or otherwise, is to be assessed on the basis of the application of each instrument to the employee and not the intentions of the parties as to working arrangements which may flow from those terms.

[28] In addition, the assessment of the Better Off Overall Test is to be undertaken at a particular point in time, being the “test time”. The test time is the time at which the application for approval of the agreement is made to Fair Work Australia. 15 This reinforces that it is a comparison between the terms and conditions of employment that is to be assessed, rather than the practices and working arrangements that may flow from those terms, since the agreement cannot commence until after approval by FWA.

[29] I have therefore concluded that the reasoning in Bupa should be adopted in assessing the Better Off Overall Test.

[30] The assessment as to whether an agreement passes the Better Off Overall Test is a global one. While I am satisfied that the voluntary hours provisions of the Agreement are less beneficial to the employees than the terms of the modern awards, I am required to form a view as to whether the Agreement provisions that the employer has identified as more beneficial to the employees than the reference instruments results in them being better off overall.

[31] The majority of the substantive terms of the Agreement reflect the provisions of the reference instruments. In relation to the balance of the substantive terms, some are less beneficial as outlined in the Preliminary Findings. Against that, the Agreement contains more beneficial overtime provisions when work is performed at the direction of the employer, more favourable penalty payments for ordinary hours worked on a Saturday or Sunday for those employees whose reference instrument is the Hospitality Industry (General) Award 2010 and a marginal increase in wages for some classifications.

[32] I conclude that the more beneficial provisions of the Agreement are not sufficient to overcome the inferior additional voluntary hours at ordinary time, such that it could be determined that the employees are better off overall under the Agreement.

[33] Pursuant to s.190 of the FW Act, the Tribunal may approve an Agreement with undertakings where the application has been made under s.185 and where FWA has a concern that the agreement does not meet the requirements of ss.186 and 187 of the FW Act.

[34] In addition to the undertakings provided by the employer as referred to in [7] above, the employer has provided further undertakings to the effect that the voluntary hours provisions of the Agreement will not be applied to employees engaged to perform work at Independent Grocers – Metcash, Darwin, and that any agreement by an employee to work additional hours will be recorded in writing and signed by the employee and employer. 16

[35] Taking into account all the undertakings I am still unable to conclude that the Agreement passes the Better Off Overall Test. The more beneficial terms of the Agreement are limited and do not outweigh the voluntary hours provision which applies to employees other than those at Metcash.

Are there exceptional circumstances?

[36] In the alternative, Mr Mossman submitted that the Agreement could be approved pursuant to s.189 of the FW Act, which is in the following terms:

[37] Section 189 requires that there be exceptional circumstances. Mr Mossman submitted that the matters addressed by Mr Karras in his statement constitute the exceptional circumstances. These matters are: 17

[38] Mr Mossman submitted that the example contained in s.189(3) of the FW Act should not be read as reducing the discretion created by the section. 18 He referred to, among other decisions, Samphie Pty Ltd T/As Black Crow Organics19 (Samphie) where Commissioner Asbury approved an agreement containing voluntary hours provisions pursuant to s.189 of the FW Act. The exceptional circumstances in that case were held to be associated with the seasonal nature of the employer’s business and that it was subject to peaks and troughs in the workload. The Commissioner found that this had a detrimental effect on regular casual employees who were unable to maximise their income in peak periods to offset a lack of earnings in non-peak periods.

[39] The expression “exceptional circumstances” was considered in some detail in Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Australian Postal Corporation. 20 In that matter His Honour Vice President Lawler was considering an application for an extension of the required notice period for protected action under s.451(1) of the Workplace Relations Act 1996. The grant of such an application required that there be exceptional circumstances justifying the period of written notice being extended. After referring to relevant authorities His Honour stated:

[40] The factors relied upon by Mr Karras as constituting exceptional circumstances relate to the nature of the employer’s business and the profile of the employees, and it is in this context that they are to be considered. Labour hire companies are commonly contracted to provide labour to supplement a client’s existing workforce to deal with peaks in production or activity. In this regard there is nothing unusual or uncommon in the fact that the requirement for the employer to supply labour is short term or that its workforce is highly casualised.

[41] I have taken the employer’s evidence on the inability to pay the penalty rates in the reference instruments as relevant to the nature of the contractual arrangements that are agreed between the employer and its clients. The employer derives its income from clients and in my view it is the clients’ capacity to pay which is put in issue. In this regard the only direct evidence bearing on financial capacity is the statement of Mr Albrecht.

[42] In contrast to the circumstances in Samphie, the employees to be covered by the Agreement are not regular casuals who are dependent on the income in peak periods to tide them over when work is limited. The evidence in the present matter points to, largely, transient employees that cease work when the peak period ends and travel to other locations to gain work as a means of furthering the pursuit of travel. While this in itself is an unusual or uncommon situation as far as a profile of employees is concerned, I am not persuaded that there is a sufficient connection between this circumstance and the voluntary hours provisions in the Agreement.

[43] However, in my view there is an exceptional circumstance in the convergence of the profile of the employees, the provision of labour to seasonal industries (as opposed to the provision of labour to cover the regular peaks and troughs of activity that occurs in many businesses) and the employer’s business operating predominantly within the tropical areas. If this is the case then I am required to consider whether the existence of these exceptional circumstances makes the approval of the agreement “not contrary to the public interest”.

[44] The expression “in the public interest”, when used in legislation, is to be determined by making a discretionary value judgement on the relevant facts, constrained only by the subject matter and the scope and purpose of the legislation. 21 While the test in the present matter concerns the expression “not contrary to the public interest”, this approach remains apposite.

[45] The public interest is distinct from the views of persons directly affected and refers to matters that might affect the public as a whole. 22

[46] Mr Mossman submitted that, “The main public interest consideration in this application is the seasonal and cyclical nature of the business and the ability of the agreement to allow employees to maximise their income over the course of the year.” 23 These circumstances do not constitute the broader public interest and on the evidence before the Tribunal I would conclude that the Agreement is not in the public interest. The test to be applied however is whether the Agreement, because of exceptional circumstances, is not contrary to the public interest, which is a lower test.24

[47] In so far as the Agreement applies to seasonal industries and businesses, I am satisfied that it meets the required test. As alluded to earlier, I draw a distinction between, for example, mango farms and the cafe in Kununurra which have defined seasons and the normal peaks and troughs in business activity as may be seen in Independent Grocers - Metcash and the one-off events in Darwin. As noted earlier, the employer has already provided an undertaking that the voluntary hours provisions would not apply to Independent Grocers - Metcash in Darwin. A broader undertaking confining the operation of the voluntary hours provisions to identified seasonal industries, in addition to the undertakings already provided 25 would enable the Agreement to be approved.

[48] The employer is invited to submit such an undertaking within seven days of this decision.

DEPUTY PRESIDENT

Appearances:

Mr C Mossman, counsel, for the Employer with Mr E Karras

Ms S Taylor for the Employees

Hearing details:

2010
Adelaide with video links to Darwin and Brisbane and a phone link to Kununurra
26 July

Final written submissions:

Submitted by the Employer on 3 August 2010

 1   Cl 3.1(b) of the Agreement.

 2   Exhibits TE 1, TE 3, TE 4 and TE 2, respectively.

 3   At the hearing on 26 July, the employer requested, and was granted additional time to provide further information. The submissions and evidence referred to the decision incorporate the further information provided, including a further statement.

 4   Exhibit TE 3 at para 9.

 5   The statement of Mr Albrecht was forwarded subsequent to the hearing on 26 July.

 6   Samphie Pty Ltd T/A Black Crow Organics [2010] FWAA 5060 (Samphie) at [20].

 7   Application by Fanoka Pty Ltd T/A Fairview Orchards & Anor [2010] FWA 2139 (Fanoka) at [18] to [28].

 8   Simpson Farms Pty Ltd Enterprise Agreement 2009 [2010] FWAA 1864

 9   [2010] FWAA 4003

 10   Div 2 of Part 2 of Sch 7

 11   [2010] FWAFB 2762

 12   PR937654

 13   At [25].

 14   At [30] to [34] and [49].

 15   Section 193(6) of the FW Act.

 16   Provided to FWA on 4 August 2010.

 17   Exhibit TE 1 at 5.12

 18   Chubb Security – Darling Harbour Rangers Enterprise Agreement 1998, Print R0015

 19   [2010] FWAA 5060 at [26]

 20   [2007] AIRC 848

 21   O’Sullivan v Farrer and Another (1989) 168 CLR 210 at 216.

 22   Re Kellog Brown and Root, Bass Strait (Esso) Onshore/Offshore Facilities Certified Agreement 2000 (2005) 139 IR 34 at pp 40-41.

 23   Exhibit TE 1 at para 6.8.

 24   Chubb Security - Darling Harbour Rangers Enterprise Agreement 1998, Print Q3596

 25   As contained in Exhibit TE 2.




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