DECISION

Fair Work Act 2009
s.604—Appeal of decision

Transport Workers’ Union of Australia
and
Australian Municipal, Administrative, Clerical and Services Union
v
Swissport Australia Pty Ltd T/A Swissport Pty Ltd
(C2020/996 & 997)

Appeal against decision [[2020] FWCA 251] of Commissioner Wilson at Melbourne on 30 January 2020 in matter number AG2018/2008 – better off overall test – permission to appeal granted – appeal upheld.

Introduction

[1] The Transport Workers’ Union of Australia (TWU) and the Australian Municipal, Administrative, Clerical and Services Union (ASU) (collectively, the Appellants/Unions) each brought an appeal under s 604 of the Fair Work Act 2009 (FW Act) against a decision of Commissioner Wilson made on 30 January 2020 1 (Approval Decision) to approve the Aerocare Collective Agreement 2018 (Agreement).

[2] The application for approval of the Agreement was made by Aerocare Flight Support Pty Ltd (Aerocare) on 15 May 2018. The Agreement had been made with the employees to be covered by it on 1 May 2018. 92% of eligible employees voted in the ballot. 91% voted to approve the Agreement. From 6 February 2020 the Agreement replaced the Aerocare Collective Agreement 2012 (Previous Agreement). 2

[3] In around July 2018 Aerocare was rebranded as Swissport Australia Pty Ltd (Swissport/Respondent) following an acquisition that had occurred in March 2018 by Swissport International Ltd. Swissport is involved in the business of ground services and cargo handling for the aviation industry. In Australia and New Zealand, Swissport operates at 32 airports, partnering with domestic airlines and international carriers in the region.

[4] Both the TWU and the ASU were bargaining representatives for the Agreement (in addition to one employee bargaining representative). Both unions objected to the approval of the Agreement in the proceedings before the Commissioner on the basis that, they both contended, the Agreement did not pass the Better Off Overall Test (BOOT). Each union advanced different bases leading to the same conclusion.

[5] For the purposes of assessing the BOOT issues, the underlying modern award against which the BOOT is to be conducted is the Airline Operations – Ground Staff Award 2010 (Ground Staff Award).

[6] The Approval Decision was preceded by an interim decision issued on 20 December 2019 3 (Interim Decision) which dealt with concerns held by the Fair Work Commission (Commission) and the objections made by the Unions before the Commissioner.

The appeal

[7] An appeal under s 604 of the FW Act is an appeal by way of rehearing and the Commission’s powers on appeal are exercisable only if there is error on the part of the primary decision maker. There is no right to appeal and an appeal may be made only with the permission of the Commission. Subsection 604(2) requires the Commission to grant permission to appeal if satisfied that it is “in the public interest to do so”. Permission may otherwise be granted on discretionary grounds.  

[8] The Appellants’ Notices of Appeal were the same in substance and, in summary, contended that the Commissioner:

a) denied the Appellants procedural fairness;

b) erred in his assessment of the BOOT;

c) erred in his consideration as to whether to accept written undertakings resulting in substantial changes to the Agreement.

[9] On 22 April 2020 Amended Notices of Appeal were lodged asserting an additional ground of appeal, namely that, the Commissioner erred in approving the Agreement with undertakings because he could not be satisfied that the undertakings would not cause any financial detriment to the any employee covered by the Agreement. Further, that he failed to provide reasons for the same.

[10] The grounds of appeal were elaborated upon in the Appellants’ written submissions and in oral argument before us.

[11] The appeal was heard by the Full Bench on 24 April 2020 in Sydney by telephone having regard to COVID-19 restrictions. Mr M Gibian SC appeared for the Appellants and Mr F Parry QC with Mr M Follet of counsel appeared for the Respondent. We granted permission for the parties to be legally represented, having found the requirements of s 596 of the Fair Work Act 2009 (FW Act) were satisfied. 

[12] Following the decision of a Full Bench of the Commission on 16 June 2020 in Construction, Forestry, Maritime, Mining and Energy Union v C&H Acquisitions Pty Ltd, 4 as a matter of procedural fairness, the parties were provided with an opportunity to make additional written submissions. The Appellants and the Respondent did so on 26 June 2020.

History of the application

[13] On 1 May 2018 the Agreement was made when a majority of the employees to be covered by it, voted to approve the Agreement.

[14] On 15 May 2018 the Application for approval of the Agreement was filed in the Commission.

[15] On 22 May 2018 and 29 May 2018, the AWU and the TWU respectively filed Form F18s 5 opposing the approval of the Agreement on the basis that both unions contended that the Agreement failed to pass the BOOT.

[16] For reasons that are not relevant to the appeal it was necessary to adjourn the determination of the Application while other legal proceedings were concluded.

[17] On 20 March 2019 Swissport filed in the Commission reports and supporting documents (Electronic BOOT Documents).

[18] On 30 April 2019 the Commissioner issued Orders that included:

a) directing Swissport to file in the Commission a PDF or Excel spreadsheet version of the Electronic BOOT Documents.

b) permitting the Unions’ legal and industrial teams access to the Electronic BOOT Documents in the Commission’s Registry.

[19] Representatives of the unions inspected the Electronic BOOT Documents at the Fair Work Commission Office in Sydney.

[20] On 4 June 2019 the TWU filed its submissions (including in relation to the BOOT data) and its witness evidence being:

a) a Statement of Therese Walton, National Industrial Officer/Negotiator; and

b) a Statement of Shane O’Brien, Director of Aviation Campaigns.

[21] On 4 June 2019 the AWU filed its submissions and a witness statement from Matthew Norrey, its Victorian Branch Secretary.

[22] The Commissioner conducted a hearing on 26 and 27 June 2019 and 7 August 2019.

[23] On the first day of the hearing the Electronic BOOT Documents were marked as Exhibit #Aerocare 6.

[24] On the final day of the hearing:

a) Swissport filed Amended Undertakings; 6 and

b) the Appellants sought an indulgence to file an additional note.

[25] At the conclusion of the hearing the Commissioner programmed the filing of additional material.

[26] On 4 October 2019 the Commissioner issued further Directions (October 2019 Directions) for Swissport to compile and provide to the Commission by 1 November 2019 a Modelling Report (October 2019 Modelling Report) to be extracted from the documents comprising Exhibit #Aerocare 6.

[27] The Directions:

a) explained that the “required extractions are the hypothetical roster and payments for 200 randomly selected employees, being approximately 10% of the total of the 2,036 identified by the F17 as covered by the Agreement at the time of the ballot.”

b) detailed what information was to be extracted.

c) insisted that the information “not be limited or encrypted in any way.”

[28] All parties were given “liberty to apply to the Commission for further or amended directions”.

[29] On 17 October 2019 Swissport filed a Statutory Declaration and correspondence. It noted that the October 2019 Modelling Report would be filed separately. The Unions were copied into the correspondence and received the Statutory Declaration. The Statutory Declaration of Greg Shelley explained Swissport’s compliance with the October 2019 Directions and the compilation of the October 2019 Modelling Report.

[30] It did so later that day. Because it was not required to do so by the October 2019 Directions, Swissport did not copy the Unions into the October 2019 Modelling Report.

[31] On 6 November 2019 the Commissioner wrote to Swissport seeking a revised modelling report in compliance with October 2019 Directions.

[32] On 7 November 2019 Swissport wrote to the Commissioner addressing the queries that the Commissioner had with the October 2019 Modelling Report.

[33] On 20 November 2019 the Commissioner provided a status update. He advised the parties that he would not consider further correspondence seeking another update on the status of the matter.

[34] On 20 December 2019 the Commissioner issued the Interim Decision. In summary, he held that:

“[2] …. I am satisfied that the Agreement meets all legislative requirements, with the exception that I am not satisfied the Agreement as it stands passes the better off overall test (BOOT). I am, however, prepared to consider its approval with further undertakings to be given by Aerocare which meet all relevant tests within s.190. Through this decision I issue Directions for the filing of such undertakings if the Applicant is prepared to give them.”

[35] On 9 January 2020 Swissport filed amended undertakings. 7

[36] On 16 January 2020 the Unions filed submissions addressing the amended undertakings filed on 9 January 2020. 8

[37] On 22 January 2020 Swissport filed submissions and revised undertakings. 9

[38] On 23 January 2020 (10.19 am) the Commissioner advised all parties about a continuing BOOT concern. 10 The further modelling (January 2020 Modelling) was provided to the parties in an attachment to the email. Further undertakings were invited.

[39] On 23 January 2020 (2.15 pm) Swissport provided further undertakings. 11

[40] On 23 January 2020 (8.22 pm) the TWU responded to Swissport’s further undertakings. 12 In relation to the “Opal issue” the note13 stated that:

“The TWU has not been provided with the underlying information relied upon by the Commission in undertaking its analysis or which would otherwise permit it to assess the calculations conducted by it or Swissport. …”

[41] On 24 January 2020 (9.03am) the AWU responded to the Swissport’s further undertakings. 14 The submissions,15 in relation to the Opal issue, noted that,

“The ASU has not been provided by the Commission with the information relied upon by the Commission in making its analysis …”

[42] On 24 January 2020 (10.25 am), noting that each of the TWU and AWU had indicated that they had not seen the material that the Commission used “in the course of the January models”, the Commissioner provided them both with an opportunity to see the material. He asked that they respond by 2 pm. 16 At 12.56 pm the TWU advised that it wanted to see the material.17 At 1.10 pm the AWU requested to see the material.18

[43] On 24 January 2020 (1.48 pm) the Commissioner provided the TWU and AWU with “the material the Commission used in the course of the January models”. 19 The material included “an excel spreadsheet for the models … as at 1 July 2019. Also provided [was] a summary report which [set] out how the modelling has been revised to incorporate the undertakings received.” The 7 pages of modelling noted that this “modelling is based on many of the modelling assumptions used for the previous modelling reports provided to the Commissioner prior to the interim decision.”20

[44] On 28 January 2020 (at 10.28 am) the TWU 21 and (at 12.20 pm) the AWU22 made further submissions.

[45] On 29 January 2020 (10.03 am) Swissport made further submissions. 23 At 10.23 am the Commissioner advised the Unions that they could make any final submissions by 2.00 pm.24 No further submissions were received.

[46] On 29 January 2020 (2.37 pm) the Commissioner invited a further undertaking in relation to superannuation. 25 Swissport provided the undertaking at 3.20 pm (Final Form of Consolidated Undertakings).26 At 3.50 pm the Commissioner sought the views of the Unions.

[47] On 30 January 2020 (at 10.21 am) the TWU 27 and (at 12.09 pm) the AWU28 made further submissions. At 5.03pm the Approval Decision was issued.

The Interim Decision

[48] After first dealing with introductory, arrangement, evidence, background matters and the applicable legislation, the Commissioner:

Chapter 7 - Pre-approval matters

a) considered the TWU’s submission that the Agreement was genuinely agreed. The Commissioner observed that the “submissions of the TWU are slight in detail and were not developed in its evidence. Overall, there is insufficient evidence to make a finding that the matters complained of in the ballot process would cause the Agreement to have not been genuinely agreed.” 29 The Commissioner concluded that” ss. 180(1), 181(1) and 188(1)(c) of the Act have been complied with.”30 These findings were not challenged on appeal.

b) considered the ASU’s complaint that the Agreement did not contain a definition of shift worker for the purposes of the National Employment Standards (NES). After considering the terms of the Agreement 31 the Commissioner concluded that “the Agreement does not cover continuous shift workers for the purpose of the NES in accordance with s.196 of the Act and therefore I find that no such definition is required.”32 This finding was not challenged on appeal.

Chapter 8 – Consideration – matters associated with the BOOT

c) noted that all parties accepted the applicability of the principles established in Re Loaded Rates Agreements 33 (Re Loaded Rates) and then set out the established principles34. The Commissioner summarised Swissport’s submissions,35 its response to the initial concerns raised by the Commission,36 and the TWU’s37 and ASU’s38 submissions on the BOOT.39 The Commissioner noted that:

“[43] In summary, the departures from the Ground Staff Award identified by the unions surround provisions of the 2018 Agreement allowing for greater flexibility in the rostering of PSE’s. In this regard, the Agreement provides for loaded rates of pay for employees working Monday to Friday, Saturdays, Sundays and Public Holidays (Schedule 1). Overtime is payable for work in excess of 12 hours in any one day; 20 days in the same roster (4 weeks) or more than 152 hours in the same roster period. There is a 20% penalty payable for employees who work between midnight and 6:00 AM referred to as the pre-dawn allowance. Split shifts can be worked by employees who opt-in to such arrangements and there are several allowances payable under the Award which are either loaded into the rates of pay or vary from that found under the Award.”

d) addressed the disagreement between the parties about classification matching. The Commissioner considered the evidence of Mr Shelley and the contents of Schedule A – Classifications & Remuneration table in the Agreement. 40 He then dealt with specific classifications41 and ultimately made findings of fact about the same.42 The Commissioner’s classification matching was not challenged on appeal.

e) resolved the “test time” contentions 43 by holding, correctly, that, although the test time for the Agreement was 15 May 2018, he was entitled to “rely on the undertakings proffered by [Swissport] on 6 August 2019.”44 This finding was not challenged on appeal. The relevant undertakings applied rates from 1 July 2019 back to the date of lodgement.

f) noted and then addressed the fact that determining “the correct approach to split shifts is critical to [the] application of the BOOT assessment” 45 because if overtime is paid on the second tranche of the split-shift the Agreement cannot pass the BOOT. The Commissioner noted the Unions’ staunch opposition to split-shifts under the Agreement46 and Swissport’s characterisation of “its current scheme whereby employees opt-in to split-shifts.”47 The Commissioner summarised the evidence and the submissions of the parties on the split-shift issue. The Commissioner found for the construction advanced by the Unions and concluded that:

“[99] I am satisfied that the limitation in Clause 28.3(d) is real and protective and that a requirement (however described) to work more than one shift in a 24-hour period takes the work out of the thing regulated within Clause 28.3, namely the ordinary hours of work of shiftwork. Clause 32 (Overtime) establishes a scheme of payment for “work done outside ordinary hours on any day or shift” (32.1(a)) which I am satisfied applies to the second tranche of work associated with an Aerocare employee’s split shift.”

g) addressed submissions in relation to specific entitlements relating to part-time employees, 48 noted that “where the Award and the Agreement depart is over the matter of when overtime is payable.”49

h) addressed submissions in relation to specific entitlements relating to casual employees, 50 and noting that the issue was resolved by the undertakings provided on 6 August 2019.51

i) dealt with the concerns the Commission had raised with Swissport about penalties and overtime on Saturdays and Sundays, Swissport’s submissions about the benefit of the loaded rates and, ultimately, the undertaking provided by Swissport in relation to ASA Level 1 and Level 2 employees.   ⁵²

j) dealt with the concerns the Commission had raised with Swissport about early morning, afternoon and night penalties/pre-dawn shift allowance. 53

k) considered the parties’ submissions about shift swaps and vacated shifts. 54

l) considered the parties’ submissions about allowances and other entitlements including annual leave loading. 55

m) assessed the adequacy of Swissport’s BOOT material, concluding that “deciphering this material frankly would have been a task worthy of “Jean-Francois Champollion – the person credited with having compiled a modern grammar of the Ancient Egyptian hieroglyphs.” 56 The Commissioner further observed that “the impenetrable nature of the material that has been provided has not assisted the Commission’s task, but rather hindered it. The degree of its opacity is such that the material cannot be viewed as a tool that would assist in assessing the BOOT.”57 The Commissioner noted that “the basis on which Ms Hennessey is put forward as an expert to the Commission is unclear.”58 The Commissioner largely rejected Ms Hennessey’s evidence.

n) observed that “to understand the origins of [Swissport’s] BOOT information it is first necessary to explain [Swissport’s] rostering system, “Aeronet” 59 and its use of “an IT algorithm and software system known as the Airport, Resource Optimisation System (AROS).”60 He then proceeded to explain the same. The Commissioner noted that Swissport submitted “that the Excel spreadsheets contain the flight schedule information from April and December 2018 Roster Periods drawn from their Aeronet System”61 and that this material was used in the PwC Reports.62 The Commissioner then considered the evidence of the Unions and the parties’ respective submissions. The Commissioner concluded that:

“[158] The findings made above regarding the treatment of split shifts, and in particular that the second portion of work on a particular day is to be paid at overtime rates, means there can be little if any reliance by me on the extrapolations drawn by Aerocare from the Aerocare BOOT Material and the PwC Reports. Instead, the Commission will need to rely upon its own modelling, based upon the findings made in the course of this decision. This section of the decision canvasses the matters relevant to the undertaking of the BOOT modelling.”

o) proceeded to explain the modelling undertaken by the Commission and the identification of “at risk” classifications. 63

p) addressed the hypothetical nature of [Swissport’s] rostering arrangements, noting that:

“[166] …. The indicative roster so provided is so hypothetical it has never applied, never will, and what is more would never be allowed to operate if any externality should arise putting pressure on its underlying assumptions. Such externality would, of course, include a tribunal decision about the operation of the Modern Award. Bluntly put, the algorithm’s purpose is to avoid cost for Aerocare and if a decision were made that, say, the second tranche of a split shift is to be paid overtime rates, the algorithm would likely be changed to ensure no employee is rostered for a split shift if such could ever be avoided. Such is consistent with Mr Shelley’s evidence that if the Commission found overtime rates should be paid on the second tranche of a split shift then the work would be allocated to another employee.”

q) explained that:

“[169] Having identified the classifications potentially “at risk”, modelling was then undertaken by the Commission according to indicative roster samples derived from the Aerocare BOOT Subset Material. Each of the “at risk” classifications were considered for whether application of the findings made in this decision would leave the indicated employee better off overall. This was done by selecting a sample of employees from the subset material who conformed with the analytical need – namely that they were in an “at risk” classification match, and who either appeared to work a significant number of split shifts or otherwise had a rostering pattern with greater than usual penalty work if they were paid under the Ground Staff Award. Such analysis, of course, is focussed on the financial impact of the 2018 Agreement (as would be modified by the August 2019 undertakings), the indicative rosters submitted by Aerocare, and the Commission’s findings about the operation of the Agreement and the Ground Staff Award.”

r) identified the several departures of the Agreement from the Ground Staff Award that may affect the Commission’s assessment of the BOOT. 64

s) explained the Commission’s modelling methodology as follows:

“[176] The density of data within the Aerocare BOOT Material and the completely locked down nature of the spreadsheets provided with no visible formulae or capacity to search or undertake “what if” analysis mean they serve no practical purpose in resolving the central question in this decision; of whether the Commission may be satisfied that the 2018 Agreement passes the BOOT. Because of this, after the decision in this matter was reserved the Applicant was directed to provide to the Commissioner a randomly selected subset of the records in the BOOT spreadsheet organised in a way that could be used in modelling by the Commission. The subset was expressed as being the hypothetical roster and payments for 200 randomly selected employees, being approximately 10% of the total of the 2,036 employees identified by the Form F17 Statutory Declaration as being covered by the Agreement at the time of the ballot. I am satisfied that the Applicant provided material which conformed with the direction.

[177] Having regard to this additional material, referred to as the Aerocare BOOT Subset Material, the following steps were taken to apply and resolve the purposes of the BOOT findings made in this decision about the BOOT;

1. Using the wage rates stated by the undertakings to apply from start of the Agreement and the Modern Award wage rates applicable at test time, identify those classifications and working circumstances at risk of not passing the BOOT because the face of the financial arrangements pertinent to the combinations does not support a clear pass. For practical purposes, this means the Agreement wage rates stated on page 36 of the Agreement is applying “rate from 1 July 2019” will be compared with Modern Award rates applicable from “test time” being 15 May 2018 the date on which the Applicant made an application for approval of the 2018 Agreement.

2. Having identified the “at risk” classification combinations, conduct modelling on the rostering patterns indicated in the Aerocare BOOT Subset Material. The modelling so performed will be on a small number of employees shown in the subset information and will focus on whether any of the identified employees in rostering arrangements would result in the identified employees not being financially better off overall.

3. After completion of this modelling, consider whether non-financial matters would change the conclusion which otherwise would be based only on the financial parameters of the 2018 Agreement.

4. After the foregoing steps have been taken, conclude whether the BOOT has been passed.”

t) continued:

“[178] The Commission’s modelling examined the rosters and wages of 21 permanent employees and 14 casual employees. It tested the rosters provided by Aerocare against the Ground Staff Award provisions as they stood at “test time”, being 15 May 2018 as well as against the wage rates now applicable under the Award. My analysis initially deals with comparisons of wages to be earned under the 2018 Agreement with the test time Award provisions.

[179] The Commission’s modelling demonstrates two things. Firstly, the margin between wages earned under the 2018 Agreement and the Ground Staff Award is sensitive to the finding made in this decision that the second tranche of work associated with a split shift is overtime. Secondly, the Aerocare and PwC modelling has not taken account of the effects on predicted wages of the Award’s Clause 30.5 which provides for a penalty payment for non-continuous afternoon and night shifts. The two factors cause many of the employees considered in the Commission’s modelling to not be better off overall.

[180] In relation to the matter of split shifts, the degree of sensitivity is such that in all cases modelled by the Commission where an employee works split shifts recalculation of the second portion of the work pushed the final assessment for that employee to a BOOT fail. The failure in the Aerocare and PwC modelling to account for a penalty payment for non-continuous afternoon and night shifts also has a significant effect. …”

u) in summary concluded 65 that:

•  Permanent employees – 21 models were examined for 18 different employees. Multiple models were run on 1 employee, examining different variables. Of the 21 models examined, 10 did not pass, with only 1 of those not passing not working split shifts; and

•  Casual employees – 14 models were examined relating to the indicative hours of 2 different employees. Of the 14 models run 12 did not pass, and none of those employees worked split shifts.

v) set out the modelling results for casual employees. 66

w) expounded that:

“[187] Analysis of the foregoing and the material supporting the summary shows it is likely a number of employees will not be better off overall because of the combined impact of them working split shifts and not working continuous afternoon and night shifts. After taking these matters into account, as well as the modelling sitting behind the summary, my disposition is two-fold – firstly, to consider inviting further undertakings from Aerocare on the subject of split shifts and not working continuous afternoon and night shifts; and secondly to examine whether the acceptance of undertakings on those subjects would then allow me to be satisfied the 2018 Agreement passed the BOOT.”

x) explained the further round of Commission modelling as such:

“[190] As a result of the foregoing matters further analysis was requested by me to be undertaken, and in particular on whether what that may suggest about any remaining issues in the event that undertakings were given and accepted in relation to both the split shift and non-continuous afternoon and night shift matters. Necessarily this is entering into the realm of hypothetical layered upon hypothetical, however the nature of the material presently before the Commission does not easily lend itself to an alternative.

[191] The results of the further modelling show broadly that undertakings on both the split shift and non-continuous afternoon and night shift matters would alleviate the concerns I hold about permanent employees not being better off overall, but not in relation to the concerns I hold for casual employees, (bearing in mind that testing was undertaken in the Commission modelling for only a limited number of causal employees). …”

y) made conclusions about which employees would pass the BOOT and the bases for that conclusion 67 including when the car parking allowance is taken into consideration:

“[196] The rostering models provided to the Commission by Aerocare, for the reasons referred to above, are heavily reliant upon the use of split shifts, and thereby the payment of the car parking allowance. It becomes evident from further consideration of the material before the Commission that removing a car parking allowance from payments to be made to employees because they no longer work split shifts will have a significant impact upon the payments to be made to employees. In particular, the further modelling shows that if permanent employees did not receive the car parking allowance 9 would take home less pay under the 2018 Agreement than under the Ground Staff Award. The same modelling shows for casual employees that 4 of the 7 passing models would then not pass if the employee did not receive the car parking allowance.”

z) noted the submissions of Swissport relating to the non-financial benefits of the Agreement including the flexibility accorded by split-shifts and shift swaps 68 and additional beneficial terms in the Agreement.69 The Commissioner concluded that:

“[208] Were the differences between the calculated wage rates for the 2018 Agreement and the Ground Staff to be close, or at least closer than indicated in the table above and the overall decision about employees being better off overall was a matter of fine balance the flexibilities associated with the non-financial improvements may be sufficient to tip the balance in favour of approval. However, the indicated differences are substantial and not a matter of a few tenths-of-one-percent difference. Accordingly, I do not find that the non-financial benefits fall in favour of a finding that the 2018 Agreement passes the BOOT.”

aa) addressed the decision in ANMF v Domain Aged Care. 70

bb) concluded that “several monetary related features of the … Agreement would lead to a finding that the BOOT has not been passed,” 71 but expressed the view that he was “of the view that [the BOOT issues] are capable of being addressed through the giving of undertakings on each subject.”72 The Commissioner then explained the nature of 6 additional undertakings being sought.73

cc) Addressed s.190 of the FW Act relating the circumstances where the Commission can accept undertakings 74, concluded that the undertakings (he was seeking, if provided) would not result in a financial detriment to the employees to be covered by the Agreement75 and, in relation to the question of whether all of the undertakings considered together would result in substantial changes to the Agreement, concluded that they would not.76

dd) concluded that:

1. The 2018 Agreement has been genuinely agreed and the group covered is fairly chosen (s.186(2) and (4));

2. I am satisfied that it does not contain any unlawful terms (s.186(4));

3. I am satisfied that it includes the requisite term about settling disputes (s.186(6), see Clause 43);

4. The preapproval requirements set out in ss,180(1), 181(1) and 188(1)(c) have been met;

5. A shiftworker definition is not required (s.196); and

6. That any decision to approve the Agreement will require insertion of the model consultation term and the model flexibility term (s.202 and s.205)).

ee) programmed (as set out above) the filing and service of additional undertakings and submissions in relation to the same.

The Approval Decision

[49] In the Approval Decision the Commissioner:

a) referred to the findings contained in the Interim Decision. 77

b) repeated the undertakings he had sought. 78

c) set out the chronology of events and submissions made since the Interim Decision resulting in the Final Form of Consolidated Undertakings received on 29 January 2020 (being the second set of undertakings received on that date). 79

d) noted the submissions made by the Unions and each union’s continue objection that, even with the undertakings, the Agreement does not pass the BOOT and the reasons for them contending the same. 80

e) determined outstanding issues 81 related to:

i. split shifts (Undertaking 10),

ii. non-continuous afternoon and night shifts (Undertaking 12),

iii. ordinary hours prior to 7.00 am (Undertaking 11(b)),

iv. salary reconciliation (Undertaking 9),

v. overtime (Undertaking 11(c)),

vi. Opal (Undertakings 7 and 8),

vii. superannuation being a BOOT assessment issue, and

viii. overtime for short notice shift changes.

f) concluded that:

“[44] …. After consideration of the effect of the Final Undertakings and all the available material on the subject, I am satisfied that the wages set out ensure that each Award covered employee and prospective employee would be better off under the 2018 Agreement than under the Ground Staff Award. I am satisfied that the changes made to wages in the undertaking and the calculation of superannuation contributions are not substantial change. The changes made increase benefits to employees in such a way that does not lead to the wholesale reshaping of the Agreement such that it bears no resemblance to the pre-undertaking Agreement.”

g) approved the Agreement with the Final Form of Consolidated Undertakings.

[50] The Agreement commenced on 6 February 2020. It has a nominal expiry date of 30 January 2024.

Ground of appeal 2 – The Appellants were denied procedural fairness

[51] We start with the second ground of appeal because it can be briefly dispensed with.

[52] The second ground of appeal contends that the Appellants were denied procedural fairness because the Commissioner decided the BOOT question relying upon modelling not available to the parties and because the modelling was based on further information provided to the Commission by Swissport (not made available to the Appellants).

[53] Both the TWU and the ASU were bargaining representatives. We accept that procedural fairness considerations arise with respect to bargaining representatives in the context of agreement approvals. 82 However, nothing in the conduct of the matter by the Commissioner offended against those important considerations. The chronology above evidences a model of consultation and involvement of the bargaining representatives. The opportunities provided to the Unions were exhaustive.

[54] In their submission before us the Appellants appropriately conceded that “there is nothing inappropriate in the Commission directing a party to produce information that it is considered will facilitate the Commission’s consideration of the application.” Indeed, in the circumstances of this case and having regard to the findings made by the Commissioner about the material supplied by Swissport, it was entirely appropriate that the Commissioner seek additional material. However, the complaint then made by the Appellants is misplaced. They contend that they “were entitled to be heard on whether the random sample provided met the requirements of the Loaded Rates Decision…” It was for that purpose that the Commissioner granted all parties liberty to apply in relation to the October 2019 Directions. The Unions never sought to be heard.

[55] The Appellants’ complaint that “the Commissioner did not hear from the parties prior to the issuing [the October 2019 Directions], or before determining that “advanced modelling” was “desirable” ignores the fact that the October 2019 Directions expressly gave the parties liberty to apply. At no time after 4 October 2019 did the Unions seek to do so. To suggest that they were locked out of a process to do so by the email from the Commissioner on 20 November 2019 is nonsense. That email addressed only the Commissioner’s desire not to receive further correspondence asking when his decision would be issued. Even if the Unions understood the 20 November 2019 email to be a bar to further correspondence it does not explain their failure to seek any amendment to the October 2019 Directions in the more than 6-week period between 4 October 2019 and 20 November 2019.

[56] The Appellants further complain that the “TWU and the ASU were not provided with the [Swissport] BOOT Subset Material. To this day neither the TWU nor the ASU, being bargaining representatives for the Agreement, have seen the [Swissport] BOOT Subset Material.” We observe that, although the Unions were put on notice about the existence of the material on 17 October 2019, neither union asked to see the material. The material they asked to see in January 2020 (the January models) was provided to them, when they asked to see it. There is no reason to believe that the Commissioner would have denied the Unions access to the October material if they had asked to see it. They did not. In circumstances where the Unions never asked to see the October material, the Commissioner denied them nothing. To the extent that Unions now complain that “the unions and the employees they represent are still entirely unaware of the rostering information used by the Commission” that ignorance is of their own making.

[57] For these reasons, ground 2 of the appeal is rejected.

Ground of appeal 1 – The Agreement did not pass the BOOT

[58] The first ground of appeal asserts that the Commissioner erred in his application of the BOOT. Ground 1 specifically criticises the Commissioner’s use of the October 2019 Modelling Report that he caused to be undertaken prior to the Interim Decision.

[59] Section 186(2)(d) of the FW Act provides that the Commission “must be satisfied that … the agreement passes the better off overall test”. Section 193 prescribes what is necessary to pass the BOOT. If the Commission is concerned that an agreement does not pass the BOOT, s.190 allows the Commission to approve an agreement if it is satisfied that an undertaking meets the BOOT concern. Section 190(3) provides that the effect of accepting the undertaking must not cause financial detriment to any employee and must not result in substantial changes to the agreement.

[60] Recently, a Full Bench of the Commission in Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v DDP Electrical Services Pty Ltd, t/a DDP Electrical Services 83 usefully set out the established principles relevant to the BOOT as follows:

“[50] From previous Full Bench decisions of the Commission, three well-established propositions about the application of the BOOT may be discerned. The first, which is in essence a restatement of s.193(1), is that the BOOT requires a finding that each award covered employee and prospective employee would be better off under the agreement than under the relevant modern award. 84 The requirement that “each” such employee and prospective employee be better off overall is a rigorous one. The ordinary meaning of “each” is “every, of two or more considered individually or one by one”.85 Thus, every award covered employee or prospective employee must be better off overall, with the corollary that if any such employee is not better off overall, the relevant enterprise agreement does not pass the BOOT.

[51] The second proposition is that satisfaction that an employee is better off overall under the agreement than under the award requires an evaluative assessment after considering the provisions of the award and the agreement that may have been more beneficial to employees and those that may have been less beneficial. 86 This assessment was recently described by the High Court of Australia in ALDI Foods Pty Limited v Shop, Distributive & Allied Employees Association87 as follows:

“. . . This assessment is a matter of the kind which has been described in other contexts as:

"a question, not of principle or of positive findings of fact or law, but of proportion, of balance and relative emphasis, and of weighing different considerations. It involves an individual choice or discretion, as to which there may well be differences of opinion by different minds."” 88

[52] The third proposition is that the application of the BOOT requires an overall assessment to be made. This requires the identification of terms which are more beneficial for an employee, terms which are less beneficial, and an overall assessment of whether an employee would be better off under the agreement. 89

[53] Except for agreements covering small enterprises, the examination of the circumstances of each individual employee to reach a state of satisfaction that the BOOT is passed would be an exhaustive task. Section 193(7) substantially relieves the Commission of this burden by permitting it to assume, if a class of employees to which a particular employee belongs would be better off under the agreement than under the relevant modern award, that employees would be better off overall in the absence of evidence to the contrary.”

[61] We respectfully adopt that reasoning.

[62] Because the Agreement is a loaded rates agreement the principles in Re Loaded Rates Agreements 90 are also relevant. The Commissioner correctly set out the principles in the Interim Decision as follows:

“8.1 The BOOT generally/approach to loaded rates

[31] A “basic rule” provided for by s.186(1) and (2) of the Act is that before the Commission may approve an enterprise agreement it must be satisfied that the agreement passes the BOOT. In turn s.193(1) of the Act provides that a non-greenfields agreement passes the BOOT in the following circumstances;

“(1) An enterprise agreement that is not a greenfields agreement passes the better off overall test under this section if the FWC is satisfied, as at the test time, that each award covered employee, and each prospective award covered employee, for the agreement would be better off overall if the agreement applied to the employee than if the relevant modern award applied to the employee.”

[32] The 2018 Agreement is a loaded rates agreement, with rates “calculated to provide the employees the greatest benefits during the period Monday to Friday, where the bulk (approximately 75%) of the total number of shifts are worked”. 91 Each party accepted the principles established in Re Loaded Rates Agreements92 required application in this case.93 Relevant to assessment of the BOOT generally, as well as to the specific matters requiring consideration in this decision, the Full Bench in that matter summarised the Commission’s task as follows;

“[100] There are two well-established propositions concerning the application of the BOOT which may be derived from previous Full Bench decisions. The first, which is essentially a restatement of s 193(1), is that the BOOT requires a finding that each award covered employee and prospective employee would be better off under the agreement than under the relevant modern award. 94 The requirement that “each” such employee and prospective employee be better off overall is a rigorous one. The ordinary meaning of “each” is “every, of two or more considered individually or one by one”.95 Thus, every award covered employee or prospective employee must be better off overall, with the corollary that if any such employee is not better off overall, the relevant enterprise agreement does not pass the BOOT. Thus, in an agreement containing loaded rates in whole or partial substitution for award penalty rates, it is not sufficient that the majority of employees - even a very large majority - are better off overall if there are any employees at all who would not be better off overall.

[101] In the case of anything other than small employers, it would be an exhaustive task to examine the circumstances of each individual employee to reach a state of satisfaction that the BOOT is passed. Section 193(7) substantially relieves the Commission of this burden by permitting it to assume, if a class of employees to which a particular employee belongs would be better off under the agreement than under the relevant modern award, that the employees would be better off overall in the absence of evidence to the contrary. Paragraph 818 of the Explanatory Memorandum to the Fair Work Bill 2008 contains some information as to how this provision was envisaged to operate as follows (emphasis added):

“818. Although the better off overall test requires FWA to be satisfied that each award covered employee and each prospective award covered employee will be better off overall, it is intended that FWA will generally be able to apply the better off overall test to classes of employees. In the context of the approval of enterprise agreements, the better off overall test does not require FWA to enquire into each employee's individual circumstances.

Illustrative example

Moss Hardware and Garden Supplies Pty Ltd makes an enterprise agreement to cover approximately 1800 employees working at its national chain of retail garden and hardware supplies outlets. All of these employees are 'award covered employees'. The seven classifications under the agreement broadly correlate to seven classifications under the relevant modern award. Because there will be many employees within each classification under the agreement and the agreement affects each employee within a classification in the same way, FWA could group employees together when assessing the employees against the better off overall test. It is intended that FWA could assess a hypothetical employee in each of the classifications under the agreement against the relevant classification under the modern award.

If FWA were satisfied that the agreement affected each employee within the classification in the same way, and that the agreement passed the better off overall test for the hypothetical employee within the classification, FWA could be satisfied that the agreement passed the better off overall test for each award covered employee and prospective award covered employee within that classification.”

[102] Section 193(7) is not prescriptive as to the nature of the classes of employees that might be selected for the purpose of applying the BOOT, so that the Commission has to make an evaluative judgment in that respect. However the selection of a class for the purpose of s 193(7) will only be of utility if, as the emphasised parts of the above extract from the Explanatory Memorandum explain, the enterprise agreement affects the members of the class in the same way such that there is likely to be a common BOOT outcome. The example used is a class consisting of employees in a common classification, but in the case of an agreement providing for loaded rates this class would likely not be suitable if the employees in the classification worked a variety of roster patterns some of which attracted penalty rates under the relevant modern award and some of which did not. Such a class would have to be further divided into subclasses based on common patterns of working hours, taking into account evening, weekend and/or overtime hours worked, in order to apply the BOOT to a loaded rate remuneration structure which incorporated compensation and supplanted modern award penalty rates which would otherwise be applicable. Thus the effective application of s 193(7) to existing employees would necessarily require an examination of existing roster patterns worked by various categories of employees as at the test time.

[103] Greater difficulty potentially arises with respect to the requirement to apply the BOOT to every prospective award covered employee. This requires consideration of the position of potential employees to whom the agreement might apply in the future, and thus necessarily involves a degree of conjecture. In the case of an agreement applying to a defined workplace or workplaces in a substantial and mature business - for example, a major supermarket chain - the degree of conjecture may be small because it is safe to assume that any future employees will be employed on a type of roster pattern already applied in the business to an existing class of employees. That is, the Commission will be in a position to make sensible predictions about the basis upon which prospective employees might be engaged. However the position will necessarily be different where the business is small and/or still in a developmental stage or the agreement for which approval is sought permits employees to be engaged in a wider range of classifications, work locations and/or roster patterns than the workforce existing as at the test time. In that situation the basis of employment of prospective employees will not readily be able to be extrapolated from the characteristics of any identifiable classes in the existing workforce.”

[33] The same Full Bench explicitly rejected the submission that the Commission’s analysis in the case of a loaded rates arrangement should be limited to the material submitted at the time of the application;

“… that submission, which would amount to the Commission adopting a “don’t ask, don’t tell” policy, is rejected. The Commission has a statutory duty, subject to ss 189 and 190, to satisfy itself that an enterprise agreement meets the approval requirements specified in ss 186 and 187 before approving it. In the case of an agreement with a loaded rate remuneration structure, the Commission will consider the possible outcomes for employees and prospective employees working or being required to work a variety of roster patterns which are permitted by the terms of the agreement in assessing the BOOT. Also, for the reasons already explained, the Commission may require information about the patterns of working hours of current and prospective employees in order to assess whether the agreement passes the BOOT. If such information is not provided in the Form F17 statutory declaration (noting that the prescribed form does not in terms require the inclusion of such information), it may be necessary for the Commission to request the production of such information - even if no party appears before the Commission in opposition to the approval of the agreement.” 96

[34] After dealing with what these matters of principle and the well-established proposition, that the BOOT requires a finding that each award covered employee and prospective employee would be better off under the agreement than under the relevant modern award, the Full Bench turned to the proposition that the BOOT requires an overall assessment to be made, making the following findings;

“[112] The second proposition is that the BOOT requires an overall assessment to be made. This requires the identification of terms which are more beneficial for an employee, terms which are less beneficial, and an overall assessment of whether an employee would be better off under the agreement. 97 Where the terms required to be compared bear directly upon the remuneration of employees, the assessment is essentially a mathematical one. However the position becomes more complex when an agreement contains provisions superior to or not contained in the reference award conferring entitlements to non-monetary benefits, benefits which are accessible at the employee’s choice, or monetary benefits which are contingent upon specified events occurring. While it is necessary to take such entitlements into account in the BOOT assessment, ascertaining the value they are to be assigned may be a difficult task. This difficulty was adverted to in the Full Bench decision in National Tertiary Education Industry Union v University of New South Wales98 in the following terms:

“[96] There is an obvious problem of comparing apples with oranges when it comes to including changes to non-monetary terms and conditions into the ‘overall’ assessment that is required by the BOOT. In such circumstances the Tribunal must simply do its best and make what amounts to an impressionistic assessment, albeit by taking into account any evidence about the significance to particular classes of employees covered by the Agreement of changes to non-monetary terms that render them less beneficial than the equivalent non-monetary term in an award.””

[35] It then established these principles for consideration of loaded rates agreements;

“[115] In summary, the following principles apply to the application of the BOOT to a loaded rates agreement:

(1) The BOOT requires every existing and prospective award covered employee to be better off overall under the agreement for which approval is sought than under the relevant modern award. If any such employee is not better off overall, the agreement does not pass the BOOT.

(2) Section 193(7) permits the Commission to assume that if a class of employees to which a particular employee belongs would be better off under the agreement than under the relevant modern award, then the employee would be better off overall in the absence of evidence to the contrary. However the selection of class for the purpose of s 193(7) will only be of utility if the agreement affects the members of the class in the same way such that there is likely to be a common BOOT outcome. If the Commission is not satisfied on the evidence that an existing or prospective award covered employee is not better off overall, the Commission cannot approve the agreement, at least not without undertakings or in the confined circumstances set out in s 189.

(3) The application of the BOOT to a loaded rates agreement will, in order for a meaningful comparison to be made, require an examination of the practices and arrangements concerning the working of ordinary and overtime hours by existing and prospective employees that flow from the terms of the agreement. This will likely require classes to be identified based on common patterns of working hours, taking into account evening, weekend and/or overtime hours worked.

(4) The starting point for the assessment will necessarily be an examination of the terms of the agreement in order to ascertain the nature and characteristics of the employment for which the agreement provides or permits. For example if an enterprise agreement makes express provision for employees to be required to work ordinary hours on weekends, those provisions cannot be ignored for BOOT purposes simply because the employer asserts it does not currently utilise those working hours or roster patterns.

(5) In the case of existing employees, this may involve an examination of existing roster patterns worked by various classes of employees as at the test time. The use of sample rosters to compare remuneration produced by a loaded rates pay structure compared to the relevant modern award may be an effective method of doing this. There may be objective evidence that a particular pattern of working hours or roster pattern permitted by an enterprise agreement is not practicable, or cannot or is unlikely to be worked.

(6) In the case of prospective employees, the assessment will necessarily involve a degree of conjecture. In the case of an enterprise operating at a defined workplace or workplaces, the Commission may be in a position to make sensible predictions about the basis upon which prospective employees might be engaged based on the roster patterns worked by existing employees. However if a business is small and/or still at the development stage, or the agreement would cover a wider range of classifications, work locations and/or roster patterns that are not in existence as at the test time, useful predictions may not readily be drawn from the way in which the existing workforce operates. In that situation the assessment will require an examination of the terms of the agreement in order to ascertain the nature and characteristics of the employment which the agreement provides for or permits.

(7) If the information concerning patterns of working hours needed to assess whether a loaded rates agreement passes the BOOT is not contained in the employer’s Form F17 statutory declaration accompanying the approval application, it may be necessary for the Commission to request or require the production of such information.

(8) The BOOT involves the making of an overall assessment as to whether an employee would be better off under the agreement, which necessitates identification of the terms in the agreements which are more and less beneficial to the employee than under the relevant award.

(9) The overall assessment required will essentially be a mathematical one where the terms being compared relate directly to remuneration. The assessment will be more complex where the agreement contains some superior entitlements which are non-monetary in nature, accessible at the employee’s option or which are contingent upon specified events occurring.

(10) In respect of non-monetary, optional or contingent entitlements in an agreement, the assumption cannot readily be made that they have the same value for all employees. In the case of a contingent benefit, it will be necessary to make a realistic assessment about the likelihood of the benefit crystallising during the period in which the agreement will operate.

(11) Where a loaded rates agreement results in significant financial detriment for existing or prospective employees compared to the relevant award, it is unlikely that a non-monetary, optional or contingent entitlement under the agreement will sufficiently compensate for the detriment for all affected employees such as to enable the agreement to pass the BOOT.”

[63] The first observation we make is that, having regard to the state of the material provided to the Commission by Swissport in support of the BOOT assessment – material criticised by both the Commissioner and the Unions – it was entirely appropriate for the Commissioner to seek to make use of the material in a useful and meaningful way, to the extent possible. It was the Commissioner’s task to assess the BOOT. Ideally, the parties provide assistance in that endeavour. However, when, as in the present case, they did not, it was open to (indeed desirably for) the Commissioner to devise a way forward. That was the intention of the October 2019 Directions which were never objected to by the Appellants.

[64] The Commissioner was mandated to assess the BOOT. He assessed the BOOT after the provision of the October 2019 Modelling Report which was based on the material that Swissport provided and to which the Unions always had access to (indeed, did access). Having considered the October 2019 Modelling Report the Commissioner was not satisfied that the Agreement passed the BOOT. A process for the receipt and consideration of undertakings then followed until the Commissioner was satisfied that the Agreement inclusive of the Final Form of Consolidated Undertakings passed the BOOT.

[65] We reject the implication made by the Appellants before us that, having found that the Swissport material lacked utility, the Commissioner was prevented from making any further inquiry and was required to dismiss the application for approval of the Agreement. The Commission is entitled to inform itself about such matters.

[66] The process adopted by the Commissioner was to assess “at risk” employees. That is those employees on the lowest base rates of pay under the Agreement when compared to the Ground Staff Award and those likely to attract penalties under the Ground Staff Award. The logic being that, if the “at risk” employees passed the BOOT, all employees above them would also. It was a logical and sensible way forward. However, the logical, sensible and practical approach that the Commission brings to industrial matters does not always find favour on judicial review: National Tertiary Education Industry Union v Swinburne University of Technology. 99

[67] The Appellants contended that “from the point [the Commissioner] sought rostering data in relation to 200 randomly selected persons from the 2036 employees covered by the Agreement, the Commissioner failed to adhere to the principles from the Loaded Rates Decision”. 100

[68] Swissport submitted that:

“The Commissioner explained his modelling process in paragraph [177] of the [Interim Decision], and nowhere there (or subsequently) did the Commissioner say that he was satisfying himself as to the BOOT based upon section 193(7) of the FW Act. Rather, what the Commissioner was doing was what many members of the Commission do in many contested BOOT cases; he used indicative BOOT data and analysis for a selection of what the Commissioner described as “at risk” employees, as a proxy for likely impacts and conclusions for each and every other employee similarly “at risk”, to enable him to reach a state of satisfaction as to compliance with the BOOT in accordance with the statute. In a “loaded rates” scenario, this is the most obvious and effective (and indeed only viable) mechanism for testing BOOT compliance.” 101

[69] Swissport’s Form F17 – Employer statutory declaration 102 set out the coverage of the Agreement as follows:

a) 2036 operational employees;

b) in the following classifications:

i. Airline Service Trainee;

ii. Airline Service Agent;

iii. Advanced Airline Service Agent;

iv. Special duties classifications;

v. Supervisor;

vi. Senior Supervisor;

vii. Leader 3.

c) 17 Full-time employees;

d) 1872 Part-time employees;

e) 147 Casual employees.

[70] In the Interim Decision the Commissioner noted that:

“[149] Aerocare also submits that based on historical data that 76% of shifts occur Monday to Friday; 24% of shifts occur on weekends being 11% on Saturdays and 13% on Sundays; 68% of shifts occur between the hours on 7:00 AM and 6:00 PM; with 10% of shifts occurring before 7:00 AM and 22% of shifts occurring after 6:00 PM which should be relied upon when assessing the BOOT.” 103

[71] Consequently, this matter is one where it would have been an exhaustive task for the Commissioner to examine the circumstances of each individual employee to reach a state of satisfaction about the BOOT. Consequently, the Commissioner relied upon the relief provided by s.193(7) of the FW Act. That is the only conclusion that follows from a fair reading of the Interim Decision and Approval Decision (read together).

[72] Section 193(7) “is not prescriptive as to the nature of the class of employees that might be selected for the purpose of applying the BOOT.” 104 In the present matter the Commissioner chose a class (namely an “at risk” group of employees). He assessed that they did not pass the BOOT. He invited undertakings. He assessed that with the Final Form of Consolidated Undertakings the “at risk” class passed the BOOT. There was no evidence to the contrary from the Unions.

[73] While s.193(7) is not prescriptive as to the nature of the class of employees that might be selected Re Loaded Rates provides guidance.

“[102] …. the selection of a class for the purpose of s 193(7) will only be of utility if, as the emphasised parts of the above extract from the Explanatory Memorandum explain, the enterprise agreement affects the members of the class in the same way such that there is likely to be a common BOOT outcome. The example used is a class consisting of employees in a common classification, but in the case of an agreement providing for loaded rates this class would likely not be suitable if the employees in the classification worked a variety of roster patterns some of which attracted penalty rates under the relevant modern award and some of which did not. Such a class would have to be further divided into subclasses based on common patterns of working hours, taking into account evening, weekend and/or overtime hours worked, in order to apply the BOOT to a loaded rate remuneration structure which incorporated compensation and supplanted modern award penalty rates which would otherwise be applicable. Thus the effective application of s 193(7) to existing employees would necessarily require an examination of existing roster patterns worked by various categories of employees as at the test time. (our emphasis)

[74] And in relation to prospective employees (noting that Swissport is a mature business) Re Loaded Rates gives further guidance as follows:

“[103] …. In the case of an agreement applying to a defined workplace or workplaces in a substantial and mature business - for example, a major supermarket chain - the degree of conjecture may be small because it is safe to assume that any future employees will be employed on a type of roster pattern already applied in the business to an existing class of employees. That is, the Commission will be in a position to make sensible predictions about the basis upon which prospective employees might be engaged. …”

[75] Further, in Re Loaded Rates, it was held that:

“[107] …. The primary, and often the only, consideration which arises in the assessment of the BOOT is a comparison between the total remuneration which would be earned by existing and prospective employees under the agreement as compared to the modern award. …. where the agreement has a different pay structure than the award, particularly a loaded rate structure which incorporates some or all of the penalty rates which would be payable if the award applied, no meaningful comparison can be conducted without applying the loaded rates to the working hours patterns actually worked or reasonably capable of being worked under the agreement. Such an exercise necessarily requires examination of the practices and arrangements concerning the working of ordinary and overtime hours by existing and prospective employees that flow from the terms of the agreement.” (our emphasis)

[76] As foreshadowed in the Re Loaded Rates, the exercise undertaken by the Commissioner necessarily involved “a degree of conjecture”. 105

[77] However, the Commissioner’s selected class obliges closer analysis. The starting point for the analysis are the October 2019 Directions. The Commissioner required of Swissport “a stratified sample of information” 106 based on hypothetical rosters. “The required extractions … [were to be] for 200 randomly selected employees, being approximately 10%”107 of the employees covered by the Agreement. The October 2019 Modelling was provided. In the Interim Decision the Commissioner observed that:

“[163] The analysis indicated at item 1 above has been restricted to a comparison of the classification matches between the Ground Staff Award rates and the 2018 Agreement’s first year rate only. This has been chosen since the first-year rates must pass the BOOT. As it happens, there are obvious concerns for 12 classification matches when the 2018 Agreement wage rates (as modified by the undertaking) are compared with the Ground Staff Award as it stood at 15 May 2018 (and a greater number of concerns arise if the presently applicable Award rates are used as the point of comparison). These are referred to as the “at risk” classification matches…”

[78] The Commissioner further observed that:

“[166] The hypothetical nature of the Aerocare rostering arrangements must also be recognised and addressed. The indicative roster so provided is so hypothetical it has never applied, never will, and what is more would never be allowed to operate if any externality should arise putting pressure on its underlying assumptions. Such externality would, of course, include a tribunal decision about the operation of the Modern Award. Bluntly put, the algorithm’s purpose is to avoid cost for Aerocare and if a decision were made that, say, the second tranche of a split shift is to be paid overtime rates, the algorithm would likely be changed to ensure no employee is rostered for a split shift if such could ever be avoided. Such is consistent with Mr Shelley’s evidence that if the Commission found overtime rates should be paid on the second tranche of a split shift then the work would be allocated to another employee.” 108

[79] The Commissioner continued:

“[169] Having identified the classifications potentially “at risk”, modelling was then undertaken by the Commission according to indicative roster samples derived from the Aerocare BOOT Subset Material. Each of the “at risk” classifications were considered for whether application of the findings made in this decision would leave the indicated employee better off overall. This was done by selecting a sample of employees from the subset material who conformed with the analytical need – namely that they were in an “at risk” classification match, and who either appeared to work a significant number of split shifts or otherwise had a rostering pattern with greater than usual penalty work if they were paid under the Ground Staff Award. Such analysis, of course, is focussed on the financial impact of the 2018 Agreement (as would be modified by the August 2019 undertakings), the indicative rosters submitted by Aerocare, and the Commission’s findings about the operation of the Agreement and the Ground Staff Award.”

[80] Ultimately the modelling only “examined the rosters and wages of 21 permanent employees and 14 casual employees.” 109

[81] It is not apparent to us how the examination of 35 employees was consistent with the need to:

a) select a class consisting of employees in common classifications; and

b) (noting that the classifications will likely work a variety of roster patterns some of which attracted penalty rates under the relevant modern award and some of which do not) further divide the class into subclasses based on common patterns of working hours, taking into account evening, weekend and/or overtime hours worked.

[82] The Respondent contended that the Commissioner’s approach was “the most obvious and effective (and indeed the only viable) mechanism for testing the BOOT compliance.” 110 In its submissions before the Commissioner and before us111 Swissport relied upon the decision in Hart v Coles Supermarkets Australia Pty Ltd.112

[83] In Re Loaded Rates, the Full Bench dealt with the decision in Hart in the following terms:

“[108] … Hart involved a challenge, on BOOT grounds, to the approval of an enterprise agreement which applied to Coles and Bi-Lo supermarkets across Australia, which may be regarded as constituting a large, well-established and mature business. The nature of the remuneration structure in the agreement under consideration was described in the following terms:

“[7] The parties understandably commenced their analysis with a consideration of the monetary benefits under the respective instruments for working at particular times of the day. The evidence deals with the comparison of payments under the instruments in isolation, as well as the impact of these comparisons on actual employee rosters over the period of the roster. Much of this evidence is non-contentious. In essence, the Agreement provides for a higher hourly rate than the relevant award rate, but applies lower penalty payments for evenings, weekends and public holidays.”

[109] The parties advanced their submissions, and the Full Bench determined the appeal, on the basis of a number of sample rosters worked by existing employees of the employer. The Full Bench described the approach it took as follows:

“[9] For the purposes of the analysis the parties led evidence regarding rosters and earnings comparisons for employees working actual rosters at the Coles Northcote and Benalla stores. Neither of these stores operates on a 24 hour basis, as some other stores do, but they can be regarded as generally representative of operating circumstances and rostering practices at most Coles stores. The data in relation to these stores is therefore a convenient basis on which to apply the BOOT and assess the relative entitlements under the Award and the Agreement from a practical perspective. It would only be necessary to consider other rosters which may be worked under the Agreement in the event that we consider that employees working under the Northcote and Benalla store rosters all pass the BOOT.

[10] Mr Hart and his representatives have selected seven employees from these stores for the purposes of more detailed analysis. It appears that these are the employees who are most disadvantaged on a wages basis because of the particular hours that they are rostered to work. In addition, Mr Hart has subjected his own rosters to the same detailed analysis – a roster issued in May 2015 and a new roster issued in September 2015. Coles had the relevant calculations checked by Mr Bruno Cecchini, a Partner with Ernst & Young. Mr Cecchini prepared a report and gave evidence on those calculations to the Commission. Apart from rounding differences, minor differences in annualising and the limited interpretive differences for Sundays and casuals, there is little difference in the outcomes from the respective analyses.

[11] As one would expect as a matter of simple logic, the more hours that are worked during times when the Agreement rates are higher, the better off an employee will be. Conversely, the more hours worked when the Award rates are higher, the worse off the employee will be compared to the Award. In other words, if an employee works predominantly at nights or on weekends, the higher base rate under the Agreement will be counterbalanced by lower penalties payable under the Agreement at these times.”

[110] No party before us submitted that the approach taken in Hart did not represent a proper application of the BOOT in accordance with s 193, nor was there any alternative approach suggested by which the BOOT might have been assessed in relation to an agreement of that nature. The Ai Group, as set out above, did submit that in assessing whether agreements passed the BOOT, the Commission should not require the employer to produce indicative rosters of hours that employees will work under the agreement but should rely on the materials lodged with the application for approval (that is, the standard Form F17 statutory declaration). That submission, which would amount to the Commission adopting a “don’t ask, don’t tell” policy, is rejected. The Commission has a statutory duty, subject to ss 189 and 190, to satisfy itself that an enterprise agreement meets the approval requirements specified in ss 186 and 187 before approving it. In the case of an agreement with a loaded rate remuneration structure, the Commission will consider the possible outcomes for employees and prospective employees working or being required to work a variety of roster patterns which are permitted by the terms of the agreement in assessing the BOOT. Also, for the reasons already explained, the Commission may require information about the patterns of working hours of current and prospective employees in order to assess whether the agreement passes the BOOT. If such information is not provided in the Form F17 statutory declaration (noting that the prescribed form does not in terms require the inclusion of such information), it may be necessary for the Commission to request the production of such information - even if no party appears before the Commission in opposition to the approval of the agreement.”

[84] The examples in Hart can be distinguished from what the Commissioner did in the present matter. Although Hart involved only two stores it was accepted that the stores were “generally representative of operating circumstances” 113. The evidence led was of “rosters and earnings comparisons for employees working actual rosters…”114 Swissport did not lead the same evidence before the Commissioner. Further, the exercise undertaken by the Commissioner did not result in evidence like that accepted in Hart.

[85] While the adoption of an approach that involved a randomised sample of “at risk” employees was logical, it was not consistent with the “effective application of s.193(7)” set out in Re Loaded Rates. It did not result in:

a) with respect to existing employees, “an examination of existing roster patterns worked by various categories of employees as at the test time” 115; and

b) with respect to prospect employees in a mature business (such as Swissport), a review of “roster pattern[s] already applied in the business to an existing class of employees, [such that] the Commission will be in a position to make sensible predictions about the basis upon which prospective employees might be engaged.” 116

[86] As the Full Bench held in Re Loaded Rates:

“[102] …. in the case of an agreement providing for loaded rates this class would likely not be suitable if the employees in the classification worked a variety of roster patterns some of which attracted penalty rates under the relevant modern award and some of which did not. Such a class would have to be further divided into subclasses based on common patterns of working hours, taking into account evening, weekend and/or overtime hours worked, in order to apply the BOOT to a loaded rate remuneration structure which incorporated compensation and supplanted modern award penalty rates which would otherwise be applicable. …”

[87] The randomised sample approach adopted by the Commissioner was not consistent with Re Loaded Rates. Therefore, because the Commissioner applied the wrong approach to the operation of s.193(7), he could not have been satisfied of the answers to the BOOT question (even after the provision of multiple rounds of undertakings). By using the randomised sample approach, the Commissioner misapprehended his function.

[88] For these reasons we uphold the first ground of appeal.

Ground of appeal 3 – The Agreement did not pass the BOOT

[89] The third ground of appeal also assert that the Commissioner further erred in his application of the BOOT in another respect. Ground 3 relates to a contention that the Commissioner failed, in considering the BOOT, to have regard to the “disadvantage or potential disadvantage to employees in the event of short notice shift changes or shift extensions.”

Grounds of appeal 4 & 5 – The Commissioner erred in accepting the undertakings – substantial change

[90] The fourth and fifth grounds of appeal contend that the Commissioner applied the wrong test in assessing whether the undertakings would likely result in substantial changes to the Agreement generally and with (in ground 5) specific reference to certain undertakings.

Ground of appeal 6 – The Commissioner erred in accepting the undertakings – financial detriment

[91] The sixth ground of appeal also concerns the Commissioner’s acceptance of undertakings. The Appellants contend that the Commissioner could not be satisfied that the undertakings would not cause any financial detriment to any employee covered by the Agreement. There was also a complaint that the Commissioner failed to be provide reasons in respect of the preliminary view he expressed at paragraph [231] of the Interim Decision and paragraph [47] of the Approval Decision.

[92] Because we have decided to uphold the appeal on ground 1 it is unnecessary for us to consider grounds 3, 4, 5 and 6.

Permission to appeal

[93] Taking into account the analysis above, we are persuaded that it is in the public interest to grant permission to the Appellants to appeal because they have identified appealable error and because there is public interest in ensuring that the principles in Re Loaded Rates are correctly applied such that the Commission can have the requisite degree of satisfaction in considering whether an agreement passes the BOOT.

Conclusion

[94] For the reasons stated above, we uphold the first ground of appeal and propose to quash the decision to approve the Agreement. We therefore order as follows:

a) permission to appeal is granted;

b) the appeal is upheld on ground 1;

c) the decision to approve the Aerocare Collective Agreement 2018 in [2020] FWCA 251 is quashed; and

d) the application to approve the Aerocare Collective Agreement 2018 (AG2018/2008) is remitted to Commissioner Johns for redetermination.

VICE PRESIDENT

Appearances:

Mr M Gibian of Senior Counsel for the Appellants.
Mr F Parry of Queens Counsel and Mr M Follet of counsel for the Respondent.

Hearing details:

24 April 2020
Sydney, by telephone

Final submissions:

26 June 2020

Printed by authority of the Commonwealth Government Printer

<PR721757>

 1   [2020] FWCA 251

 2   In any case the Previous Agreement was terminated with effect from 6 February 2020 pursuant to decision [2019] FWCA 5449

 3   [2019] FWC 8614

 4   [2020] FWCFB 3134

 5   Appeal Book (AB) 250-257 (TWU) and AB 258-260 (AWU)

 6   Exhibit #Aerocare 17

 7   Supplementary Appeal Book (Supp AB) Tab 5, p 1201

 8   AB Vol 2, tabs 44 and 47

 9   Supp AB Tab 5, p 1216

 10   Supp AB, pp 1233-1234

 11   Supp AB, Tab 7, p 1233

 12   Supp AB, Tab 7, p 1230

 13   AB Vol 2, Tab 45

 14   Supp AB, p 1247

 15   AB Vol 2, Tab 48

 16   Supp AB, 1248

 17   Supp AB, 1254

 18   Supp AB, 1250

 19   Supp AB, p 1256

 20   Supp AB, p 1257

 21   Supp AB, p 1273

 22   Supp AB, pp 1265-1267

 23   Supp AB, p 1279

 24   Supp AB, p 1284

 25   Supp AB, p 1282

 26   Email at Supp AB, p 1282, Final Form of Consolidated Undertakings at AB 1185

 27   Supp AB, p 1296

 28   Supp AB, pp 1295

 29   [2019] FWC 8614, [21]

 30   [2019] FWC 8614, [22]

 31   [2019] FWC 8614, [27]

 32   [2019] FWC 8614, [28]

 33   [2018] FWCFB 3610

 34   [2019] FWC 8614, [31]-[36]

 35   [2019] FWC 8614, [37]-[38]

 36   [2019] FWC 8614, [39]-[41]

 37   [2019] FWC 8614, [45]

 38   [2019] FWC 8614, [46]

 39   [2019] FWC 8614, [42]-[49]

 40   [2019] FWC 8614, [50]-[55]

 41   [2019] FWC 8614, [56]-[64]

 42   [2019] FWC 8614, [65]

 43   [2019] FWC 8614, [66]-[72]

 44   [2019] FWC 8614, [73]

 45   [2019] FWC 8614, [74].

 46   [2019] FWC 8614, [76]

 47   [2019] FWC 8614, [77]

 48   [2019] FWC 8614, [100]-[107]

 49   [2019] FWC 8614, [107]

 50   [2019] FWC 8614, [108]-[110]

 51   [2019] FWC 8614, [111]

52 [2019] FWC 8614, [112]-[117]

 53   [2019] FWC 8614, [118]-[121]

 54   [2019] FWC 8614, [122]-[126]

 55   [2019] FWC 8614, [127]-[130]

 56   [2019] FWC 8614, [132]

 57   [2019] FWC 8614, [133]

 58   [2019] FWC 8614, [136]

 59   [2019] FWC 8614, [137]

 60   Ibid

 61   [2019] FWC 8614, [139]

 62   [2019] FWC 8614, [140]

 63   [2019] FWC 8614, [163]

 64   [2019] FWC 8614, [174]

 65   [2019] FWC 8614, [182]

 66   [2019] FWC 8614, [184]-[186]

 67   [2019] FWC 8614, [192]-[205]

 68   [2019] FWC 8614, [206]

 69   [2019] FWC 8614, [207]

 70   [2019] FWC 8614, [212]-[218]

 71   [2019] FWC 8614, [219]

 72   [2019] FWC 8614, [224]

 73   [2019] FWC 8614, [228]-[229]

 74   [2019] FWC 8614, [230]

 75   [2019] FWC 8614, [231]

 76   [2019] FWC 8614, [238]

 77   [2020] FWCA 251, [2]

 78   [2020] FWCA 251, [3]

 79   [2020] FWCA 251, [4]-[5]

 80   [2020] FWCA 251, [6]

 81   [2020] FWCA 251, [8]-[46]

 82   CFMMEU v LCR Group Pty Ltd [2016] FWCFB 916 at [20]-[31] and United Voice v Broadspectrum (Australia) Pty Ltd [2017] FWCFB 871

 83   [2020] FWCFB 18

 84   Solar Systems Pty Ltd [2012] FWAFB 6397 at [11]; Hart v Coles Supermarkets Australia Pty Ltd [2016] FWCFB 2887 at [6], [15]; Shop, Distributive and Allied Employees Association v Beechworth Bakery [2017] FWCFB 1664 at [11]

 85   Macquarie Online Dictionary

 86   Re Armacell Australia Pty Ltd (2010) 202 IR 38 at 49 at [41]

 87   [2017] HCA 53

 88   Ibid at [99]

 89   Ibid at [92]; Armacell Australia Pty Ltd [2010] FWAFB 9985 at [41]

 90   [2018] FWCFB 3610

 91   Witness Statement Gregory Shelley, 20 March 2019, [53].

 92   [2018] FWCFB 3610

 93    Aerocare Outline of Submissions, 20 March 2019, [27]; Exhibit TWU 9, TWU Outline of Submissions, 4 June 2019, [7]; Exhibit ASU 3, ASU Outline of Submissions, [12].

 94   Solar Systems Pty Ltd [2012] FWAFB 6397 at [11]; Hart v Coles Supermarkets Australia Pty Ltd [2016] FWCFB 2887 at [6], [15]; SDAEA v Beechworth Bakery [2017] FWCFB 1664 at [11].

 95   Macquarie Online Dictionary, accessed 10 December 2019.

 96   Ibid, [110].

 97   ALDI Foods Pty Limited v Shop, Distributive & Allied Employees Association [2017] HCA 53 at [92]; Armacell Australia Pty Ltd [2010] FWAFB 9985 at [41].

 98   [2011] FWAFB 5163.

 99   [2015] FCAFC 98

 100   Appellants’ Outline of Submissions dated 18 March 2020, para 21

 101   Respondent’s Outline of Submissions dated 15 April 2020, para 20

 102   AB 231-249

 103   Second Witness Statement Gregory Shelley, 19 June 2019, [21]

 104   Re Loaded Rates Agreements [2018] FWCFB 3610, [102]

 105   Ibid [103]

 106   October 2019 Directions, [6]

 107   October 2019 Directions, [7]

 108   Transcript, PN 200 – 201.

 109   [2019] FWC 8614, [178]

 110   Respondent’s Outline of Submissions dated 15 April 2020, para 20

 111   Appeal Transcript PN141

 112   [2016] FWCFB 2887

 113   [2016] FWCFB 2887, [9]

 114   Ibid

 115   [2018] FWCFB 3610, [102]

 116   [2018] FWCFB 3610, [103]