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See Fair Work Act 2009 s.189
The Fair Work Act allows for the approval of enterprise agreements that do not pass the better off overall test if, because of exceptional circumstances, approval of the agreement would not be contrary to the public interest.
The Fair Work Commission may only approve an agreement on this basis if failure to pass the better off overall test is the only reason the Commission is not required to approve the agreement.[1]
In Nulty v Blue Star Group Pty Ltd,[2] the Full Bench said:
An example of a case in which the Commission may be satisfied exceptional circumstances exist is where the agreement is part of a reasonable strategy to deal with a short-term crisis in, and to assist in the revival of, the enterprise of an employer covered by the agreement.[3]
The test to be applied is not whether the agreement is in the broader public interest but whether the agreement, because of exceptional circumstances, is not contrary to the public interest, which is a lower test.[4]
Public interest considerations could involve deciding whether a term of an agreement undermines or reduces entitlements in a modern award to the extent that members of the public whose employment is regulated by that award may have interests which are impacted by the approval of the agreement.
It may also be the case that there is a public interest in maintaining a level playing field among employees in a particular industry or sector. This is particularly so given that the objects of the Fair Work Act to ensure 'a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions through the National Employment Standards, modern awards and national minimum wage orders'.[5]
Re Milingimbi & Outstations Progress Resource Association [2011] FWAA 1431 (Lawler VP, 4 March 2011).
An application was made for approval of an enterprise agreement known as the Milingimbi & Outstations Progress Resource Association Enterprise Agreement 2010.
The Commission was concerned that the agreement did not pass the BOOT because it did not provide penalty rates for work performed outside ordinary hours (particularly work performed on weekends).
However, the Commission was satisfied that, because of exceptional circumstances, it would not be contrary to the public interest to approve the agreement.
The workplace was an extremely remote part of Australia – some 500km from the closest town. The employer was a not-for-profit organisation that provided services to the local indigenous community and depended on Government grants to meet the costs of employing its four employees. The funding was already set for the existing year and was sufficient only to cover wage costs under the agreement. The employer had no realistic prospect of obtaining the additional funds that would be needed to meet the costs of an undertaking that would address the concerns with the BOOT.
In addition, one of the four employees to be covered by the agreement gave evidence that, due to a variety of cultural and other factors, weekends do not have the same significance as they do in other parts of Australia. The Commission was satisfied that the way in which weather interacts with the employer's activities, together with the need to accommodate cultural obligations, meant that employees were happy to be flexible about when ordinary hours were performed.
In these circumstances, the agreement was approved.
Re Poolhaven Pty Ltd [2011] FWAA 4036 (Asbury C, 27 June 2011).
An application was made for approval of an enterprise agreement known as the Poolhaven Enterprise Agreement 2011. The relevant award for the purposes of the BOOT was the Horticultural Award 2010.
The Agreement provided for employees to work additional voluntary hours and to be paid for such hours at ordinary rates. The employer was informed that it appeared the agreement did not pass the BOOT, on the basis that if additional voluntary hours were worked under the award employees would be entitled to be paid for such hours at overtime rates.
The employer submitted material that indicated there were exceptional circumstances and that approval of the agreement was not contrary to the public interest. The employer's business had been impacted by:
The Commission found that although these exceptional circumstances were all one-off events, the combination of the 3 over a short period of time had a detrimental impact on the employer. Due to the combination of the 3 natural disasters, the farm had 'missed the market' and was not in a financial position to pay the penalty rates provided for in the award.
After considering the material provided by the employer, the Commission was satisfied that the agreement should be approved because there were exceptional circumstances and approval would not be contrary to the public interest. It was also relevant that the term of the agreement was only 12 months.
Re SOS Nursing & Homecare Service [2012] FWA 10543 (Deegan C, 14 December 2012).
An application for approval of the SOS Home and Community Care Enterprise Agreement 2012 was not supported by the NSW Nurses and Midwives' Association nor the Queensland Nurses' Union on the grounds that the agreement did not pass the BOOT or comply with the NES.
The Commission determined that the agreement did not pass the BOOT. The employer submitted that it should be approved pursuant to s.189. Very little material was put by the employer in support of this claim. In essence, it was argued that, given the vital work carried out by the employees in remote and rural areas, it was in the public interest for the agreement to be approved.
The Commission found that whilst SOS employees performed a valuable service, the employer was set up to make a profit. The evidence contained nothing upon which to find exceptional circumstances that would justify the employees being subjected to an agreement which was less beneficial than the relevant awards.
The agreement was refused as it did not pass the BOOT and the Commission was not satisfied that exceptional circumstances existed which would render the approval of the agreement not contrary to the public interest.
Re Springfield Gourmet Pty Ltd [2010] FWA 8297 (Richards SDP, 23 November 2010).
An application was made for approval of the Hell Pizza Queensland Enterprise Agreement 2009, which included a provision allowing casual employees to nominate to perform duties in the morning, night and weekends at the ordinary casual hourly rate of pay. These were hours the casual employees were said to prefer to accommodate predominantly educational commitments. Payment at the ordinary hourly rate was substantially less favourable than the payment required under the relevant modern award.
The employer sought to have the agreement approved on the basis that exceptional circumstances applied – being that, if casuals were not able to choose to be paid at the ordinary hourly rate, they would be displaced by permanent employees to whom penalty rates would not apply.
The Commission was not satisfied that exceptional circumstances existed. Approving the agreement might also result in the employer receiving a labour cost advantage not received by others. The application was dismissed.
Re The Andrew Crawford Group Pty Ltd T/A Crawford Group Security and Investigations [2013] FWC 5858 (O’Callaghan SDP, 19 August 2013).
An application was made for approval of The Andrew Crawford Group Pty Ltd Enterprise Agreement 2013. The agreement applied to employees who worked as static guards, crowd controllers or 'cash in transit escorts'.
The Commission did not consider that the agreement met the BOOT. The applicant requested approval of the agreement under s.189 of the Fair Work Act on the basis that the only impediment to approval was the BOOT and that exceptional circumstances existed.
The applicant identified four security industry agreements which it asserted operated similarly to this agreement and had been approved by the Commission or its predecessor. The four security industry agreements enabled the companies concerned to charge lower rates to customers than the applicant could do under the relevant modern award. At least two customers had confirmed that the Sunday and public holiday rates were not competitive.
If the exceptional circumstance provision was applied so as to deliberately sanction the undermining of modern award entitlements to facilitate commercial competition, this would be inconsistent with the function and objective of the modern award and must therefore be contrary to the public interest.
The Commission concluded if the agreement was approved it may form the foundation for similar arguments, therefore substantially displacing the function of the modern award to set minimum employment conditions. The application was refused.
[1] Fair Work Act s.189(1)(b).
[2] Nulty v Blue Star Group Pty Ltd [2011] FWAFB 975 (Lawler VP, Sams DP, Williams DP, 16 February 2011) at para. 13, [(2011) 203 IR 1].
[3] Fair Work Act s.189(3).
[4] Re Top End Consulting Pty Ltd [2010] FWA 6442 (Bartel DP, 24 August 2010) at para. 46.
[5] Re Agnew Legal Pty Ltd [2012] FWA 10861 (Asbury C, 24 December 2012) at para. 12.