DECISION

Fair Work Act 2009
s.185—Enterprise agreement

BOC Limited
(AG2019/1877)

BOC LIMITED (GAS & GEAR - VICTORIA) CERTIFIED AGREEMENT 2019

Application for approval of an enterprise agreement – NUW objection concerning BOOT – Agreement’s hourly wages higher but no RDOs – significance of ‘intangible’ benefits – whether terms offend the NES – agreement approved

[1] BOC Limited has made an application pursuant to s 185 of the Fair Work Act 2009 (the Act) for approval of an enterprise agreement known as the BOC Limited (Gas & Gear - Victoria) Certified Agreement 2019 (the Agreement). The agreement is a single enterprise agreement.

[2] The company has provided written undertakings in response to a concern I raised about the application of penalty rates for casual employees working weekends and public holidays, and how this affects the question of whether the Agreement passes the ‘better off overall test’ measured against the General Retail Industry Award 2010 (Award). The undertakings address my concern. A copy of the undertakings is attached in Annexure A. I am satisfied that the undertakings will not cause financial detriment to any employee covered by the Agreement and that they will not result in substantial changes to the Agreement.

[3] The National Union of Workers (NUW) filed an F18 statutory declaration stating that it supported the approval of the Agreement. However, it subsequently advised the Commission that it considered that the Agreement does not pass the better off overall test in relation to prospective employees, on the basis that it does not allow them to accrue rostered days off (RDOs), unlike the Award.

Better off overall test

[4] The Agreement provides that employees employed prior to its commencement of operation will accrue 12 RDOs a year, or receive a higher rate of pay that ‘sells’ the RDOs (see Appendix A, tables 1 and 2). This mirrors the arrangements that apply to all employees under the current enterprise agreement. However, the Agreement provides that employees who become employed after the Agreement commences operation will not accrue RDOs or receive a higher rate of pay for ‘selling’ them (see Appendix A, table 3).

[5] In correspondence with the Commission the NUW initially stated that it was concerned that the rates of pay afforded to prospective employees under the Agreement were not high enough to result in them being better off overall as against the Award, because the Agreement rates were based on employees working 43 hours per week, and under the Award five of those hours would be paid at overtime rates. However the Commission’s calculations, which were provided to the company and the NUW, showed that the Agreement’s higher base rates of pay mean that prospective employees will in fact be better off financially under the Agreement than under the Award.

[6] The NUW then raised a further BOOT concern in relation to RDOs and prospective employees. It said that regardless of monetary considerations, prospective employees would not be better off overall under the Agreement, because of the fact that they would not enjoy the benefit of accruing and taking RDOs that would otherwise be available under the Award. The union sought to be heard on this issue. As a bargaining representative for the Agreement, the NUW has a right to be heard and I listed the matter for this purpose on 9 August 2019.

[7] At the hearing, the NUW acknowledged that current and prospective employees will be better off overall under the Agreement in monetary terms. However it submitted that the absence of RDOs for new employees under the Agreement was an ‘intangible’ or ‘lifestyle’ benefit that weighs in the analysis of the better off overall test, and that this is a matter of sufficient gravity to outweigh the Agreement’s higher rates of pay. The union raised a similar contention, in respect of both current and prospective employees, in relation to the Agreement’s failure to replicate the Award provision that allows employees the option to take time off in lieu of receiving overtime payments.

[8] Working longer days to accrue RDOs and taking time off in lieu of overtime are not inherently more beneficial arrangements than working ordinary days without RDOs and receiving payment for overtime. Some employees may view such arrangements as benefits referable to lifestyle, and the loss of these possibilities vis-à-vis the Award to be detriments. Other employees may be indifferent to the availability of these options or disfavour them. The difficulty with such matters is that they are susceptible of different points of view. The better off overall test must be undertaken on an objective basis. If the personal preferences of each employee covered by an agreement had to be taken into account the ‘better off overall test’ would become mired in speculation on subjective and unquantifiable matters.

[9] The assessment of the better off overall test will logically focus attention on matters that are objectively verifiable as relative benefits or detriments, including in particular the number of hours that employees can be required to work and the payments employees receive for doing so. I would also emphasise that the analysis of the better off overall test inquires whether employees would be better off overall under the Agreement than under the relevant award, not better off on a line by line or itemised basis. Trading off award conditions, such as those relating to accrual of RDOs and time off in lieu, is plainly permissible under the Act.

[10] In the present matter, prospective employees will receive higher rates of pay for working 43 hours per week under the Agreement than they would receive for working those same hours under the Award. In addition, all employees receive 13% superannuation. Objectively, I consider that prospective employees will clearly be better off overall under the Agreement than they would be under the Award, as will be all current employees. Even if it is accepted that the Agreement’s curtailment of accrued RDOs and removal of time off in lieu of overtime are detriments, I consider that these are outweighed by the higher payments provided for under the Agreement.

[11] I am satisfied that the Agreement passes the better off overall test (s 186(2)(d)).

Exclusion of the NES

[12] Another objection was raised by the NUW at the hearing. It said that the Agreement’s requirement that prospective employees work 43 hours a week is incompatible with s 62 of the Act, which is part of the National Employment Standards (NES). Section 62 states that an employer must not request or require a full-time employee to work more than 38 hours a week unless the additional hours are reasonable, taking into account the matters in s 62(3).

[13] Section 186(2)(c) states that the Commission must be satisfied, before approving an agreement, that its terms do not contravene s 55 of the Act, which provides that an enterprise agreement must not exclude a provision of the NES (s 55(1)).

[14] Clause 6 of the Agreement specifically incorporates the NES, and therefore also s 62, and states that if there is any inconsistency between the NES and the terms of the Agreement, the terms more beneficial to the employee apply. If a prospective employee covered by the Agreement considers that any of the five additional hours is unreasonable, she or he will be able to invoke the reasonableness criteria in s 62(3). I am satisfied, as required by s 186(2)(c), that the terms of the Agreement do not contravene s 55.

[15] It is odd that the Act should require the Commission to be satisfied that the terms of an enterprise agreement do not exclude the NES, given that s 56 provides that any such terms have no effect anyway. The Commission is compelled to scrutinise agreements for offending provisions and seek undertakings to cure them. But the process achieves little of substance because the NES-offending provisions cannot have effect.

[16] If the purpose of s 186(2)(c) is to ensure that employees are not misled by agreement provisions purporting to exclude the NES, it would be better for the Act to require enterprise agreements to contain a standard term affirming that the NES cannot be excluded by a term of the agreement. In this respect and others the approval requirements for enterprise agreements could usefully and fairly be simplified.

Conclusion

[17] Subject to the undertakings referred to above, and on the basis of the material contained in the application and accompanying statutory declaration, and taking into account the submissions of the company and the NUW, I am satisfied that each of the requirements of ss 186, 187, 188 and 190 as are relevant to this application for approval have been met.

[18] The National Union of Workers, being a bargaining representative for the Agreement, has given notice under s 183 of the Act that it wants the Agreement to cover it. In accordance with s 201(2) and based on the statutory declaration provided by the organisation, I note that the Agreement covers the organisation.

[19] The Agreement was approved on 12 August 2019 and, in accordance with s 54, will operate from 19 August 2019. The nominal expiry date of the Agreement is 30 April 2022.

DEPUTY PRESIDENT

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Annexure A