s.185 - Enterprise agreement

Application for approval of the LFP Australia Pty Ltd Enterprise Agreement 2024

• [1] LFP Australia Pty Ltd T/A Subway (the Applicant) has made an application for the approval of an enterprise agreement known as the LFP Australia Pty Ltd Enterprise Agreement 2024 (the Agreement). The application was made under s 185 of the Fair Work Act 2009 (Cth) (the Act). The Agreement is a single enterprise agreement.

• [2] The Shop, Distributive and Allied Employees' Association (SDA) requested a copy of the Applicant's application and the supporting materials. Copies of documents filed by the Applicant were provided to the SDA. I considered the provision of such documents in the circumstances uncontroversial. The relevant documents were disclosed on request consistent with rule 130 of the Fair Work Commission Rules 2024 (Cth) and the principles stated in the Full Bench decision in CFMEU v Ron Southon Pty Ltd.[1]

• [3] On 28 May 2024, the SDA requested to be heard under s 590 of the Act in respect of the application. Whilst not a bargaining representative for the Agreement, the SDA submitted that it had been heard by the Commission in respect to the approval of three other near identical 'Subway Agreements' and had been granted leave to appeal two near identical agreements. The SDA specifically referred to its successful appeal in Shop, Distributive and Allied Employees Association v Allen Family Pty Ltd t/a Subway Clare, Subway Findon, Subway Broken Hill, Subway Kadina, Subway Port Adelaide and Subway Port Pirie[2] (Allens) and having been heard in respect to: Subway Bridge Street Pty Ltd and Caneramble Pty Ltd Enterprise Agreement 2023,[3] B.G & D.M Tonge Pty Ltd Enterprise Agreement 2023,[4] and Shree Rudra Pty Ltd ATF RD Trust Enterprise Agreement 2023 (collectively other Subway Agreements).[5]

• [4] The Full Bench has observed that the Commission may choose, in a particular case, to hear from an employee organisation or any other person about the approval of an agreement even though the organisation or person may not otherwise have a right to be heard.[6] The exercise of discretion is not such that there is a requirement for a 'compelling reason', but rather in the particular circumstances of the matter before the Commission, the Commission considered it appropriate to inform itself, by, for example, inviting oral or written submissions from a person of an organisation. The SDA's submissions raised issues in respect of the better off overall test (BOOT), and it was apparent that the SDA was involved in Allens and had been heard in respect of three other Subway Agreements. As such, I formed the view that it was appropriate to hear from the SDA in respect of the approval of the Agreement. It is observed that the Respondent raised no objection to that course.

• [5] The Applicant and SDA asked that the Commission determine the matter on the papers and having considered the materials filed, I considered that to be an appropriate approach. Several issues arose with regard to the Agreement and as such parties were provided with the opportunity to respond to those issues.

• [6] Briefly stated, I am not satisfied that the Agreement has been genuinely agreed to by the employees covered by it pursuant to s 186(2)(a) of the Act. This conclusion is based on my finding that there had been a failure by the Applicant for the purposes of s 188(4A) of the Act to comply with s 180(5) in relation to the proposed Agreement. Accordingly, the application for approval of the Agreement is dismissed. My reasons for this conclusion follow.

• [7] The Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth) made a number of changes to enterprise agreement approval processes in Part 2-4 of the Act, that commenced operation on 6 June 2023. The notification time for the Agreement under s 173(2) was 16 November 2023 and the Agreement was made on 1 May 2024. Accordingly, both the genuine agreement and the better off overall test requirements are those applying on and from 6 June 2023.

• [8] Section 186(2)(a) of the Act requires the Commission to be satisfied that an agreement was genuinely agreed. Section 188 sets out certain matters that the Commission must take into account or be satisfied of, in determining whether an agreement has been genuinely agreed. Relevantly for present purposes, s 188(1) requires the Commission to take into account the Fair Work (Statement of Principles on Genuine Agreement) Instrument 2023 (Statement of Principles) made under s 188B in determining whether it is satisfied that the Agreement was genuinely agreed.

• [9] Pursuant to s 188B of the Act, the Commission issued the Statement of Principles on 12 May 2023. While the Commission is required to take into account the Statement of Principles in determining whether an agreement has been genuinely agreed, it does not operate as a set of mandatory rules that must be complied with by an employer absent which the Commission cannot be satisfied that an agreement has been genuinely agreed.[7]

• [10] However, s 188(4A) of the Act states the Commission cannot be satisfied that an agreement was genuinely agreed unless satisfied that the employer complied with s 180(5) of the Act. Section 180(5) requires an employer to take all reasonable steps to explain the terms of an enterprise agreement and the effect of those terms and to ensure that the explanation is provided in an appropriate manner taking into the particular circumstances of the employees who will be covered by the Agreement.

• [11] The SDA submits that the application should be distinguished from the other Subway Agreements on the basis that the Applicant had amended the Agreement to address BOOT issues that had evidently plagued the other Subway Agreements. However, the SDA still considered the Agreement did not satisfy the BOOT, hence precluding its approval.

• [12] It is one of the BOOT issues as identified by the SDA that focus turns to first. However, the issue whilst relating to a BOOT issue, is not an issue arising under s 193, that being whether the Agreement passed the BOOT. It is, instead, on the explanation that was provided to the employees who will be covered by the Agreement in respect of wages and penalty rates afforded to them under the Agreement.

• [13] The SDA had observed, as a BOOT issue, that the Agreement contains no obligation to increase the rates of pay within the Agreement, except by the application of s 206 of the Act. According to the SDA, clause 11 of the Agreement allows the Applicant to pay significantly less than the Award over the life of the Agreement, including significantly eroding any premiums that do exist in the Agreement effective the date the Agreement takes effect.

All reasonable steps to explain the terms of the Agreement

• [14] First, it is observed that as of 'test time'[8] the rates of pay in the Agreement were higher than those provided for in the Fast Food Industry Award 2020[9] (Award), which is not incorporated but is the reference instrument. Therefore, the Agreement is held to the standard of the Award. The permanent rates of pay are, on average, 3.33% to 5.06% above the Award rates. The casual rates of pay are, on average, 3.34% to 5.06% above the Award rates. Nonetheless, it is the explanation provided by the Applicant in respect of the rates of pay, or more particularly the penalty rates, with which I take issue.

• [15] Section 186(2)(a) of the Act requires that the Commission is satisfied that an agreement was genuinely agreed. Section 188 sets out certain matters that the Commission must take into account or be satisfied of, in determining whether an agreement has been genuinely agreed.

• [16] The pre-approval step in s180(5), which is an element of the 'genuinely agreed' definition in s 188(4A), is expressed as follows:

Terms of the agreement must be explained to employees etc.

(5) The employer must take all reasonable steps to ensure that:

a) the terms of the agreement, and the effect of those terms, are explained to the employees at the time and who will be covered by the agreement;

b) the explanation is provided in an appropriate manner taking into account the particular circumstances and needs of the relevant employees.

• [17] In CME Resources Pty Ltd (CME),[10] Gostencnik DP expressed the following in respect of s 180(5):

...As s 188(1) made clear, CME's compliance with s 180(5) need only be established to the satisfaction of the decision-maker. Actual compliance with s 180(5) is not a jurisdictional fact. Its objective existence is not a precondition to the Commission's power to approve the Agreement.[11] But, whether there was compliance with s 180(5) on material sufficient to enable me to reach the requisite satisfaction is a condition precedent to the exercise of the power to approve the Agreement. The approval of an agreement, absent any evidence, or upon insufficient evidence, about an employer's compliance with s 180(5) results in the Agreement having been approved without authority and so there will be jurisdictional error.[12] Arriving at a state of satisfaction as to whether an employer has complied with the obligations in s 180(5) depends on the circumstances of the case. The focus of the enquiry involves considering and evaluating the steps taken by the employer to comply, and then assessing whether such steps taken were reasonable in the circumstances and were all the reasonable steps that must have been taken in the circumstances.[13]

• [18] In Allens at paragraph [81], the Full Bench also stated that reaching the requisite state of satisfaction as to compliance with s 180(5) of the Act will depend on the circumstances of the case. The Full Bench observed that the nature of the requirement had been helpfully summarised by a Full Bench in Australian Workers' Union v Rigforce Pty Ltd t/a Rigforce[14] in the following terms:

[35] In considering the 'genuinely agreed' ground of appeal, it is necessary for reasons which will become apparent to consider in detail only the question of compliance with the pre-approval step in s 180(5). The nature of the requirement in s 180(5) was analysed in detail by the Federal Court (Flick J) in CFMEU v One Key Workforce Pty Ltd. We adopt the summary of that analysis set out in CFMMEU v Ditchfield Mining Services Pty Limited, which reduced it to the following four propositions:

(1) whether an employer has complied with the obligation in s 180(5) depends on the circumstances of the case;

(2) the focus of the enquiry whether an employer has complied with s 180(5) is first on the steps taken to comply, and then to consider whether:

• the steps taken were reasonable in the circumstances; and
• these were all the reasonable steps that should have been taken in the

(3) the object of the reasonable steps that are to be taken is to ensure that the terms of the agreement, and their effect, are explained to relevant employees in a manner that considers their particular circumstances and needs. This requires attention to the content of the explanation given; and

(4) an employer does not fall short of complying with the obligation in s 180(5) of the FW Act merely because an employee does not understand the explanation provided.

• [19] The Full Bench in Allens adopted the analysis of Gostencnik DP in BGC Contracting Pty Ltd,[15] repeating what the Deputy President had said in respect of the statutory obligation to take 'all reasonable steps':

[43] A requirement or obligation to take "all reasonable steps" seems to me to require the identification of the steps a reasonable person would regard as reasonable in the circumstances that apply. Whether particular steps are reasonable will depend on the particular circumstances existing at the time the obligation arises. A requirement to take all reasonable steps does not extend to all steps that are reasonably open in some literal or theoretical sense...

• [20] It follows that the question of compliance with s 180(5) is to be assessed against the circumstances that pertain at the time at which compliance was required.[16] By its written submissions and evidence, the Applicant contends that it took all reasonable steps to explain the terms of the Agreement by reference to the Award. It is therefore necessary to consider the content of the explanation given by the Applicant through the steps taken by it.

• [21] In response to Question 22 of part 3.4 of the Form F17B,[17] the Applicant provided detail about the steps taken to explain the terms of the Agreement.

• [22] On 16 November 2023, the Applicant sent an email to employees attaching a full copy of the proposed Agreement, a Notice of Employee Representational Rights and an Employee Q&A Document. The Applicant also provided employees with a link to the Award.[18]

• [23] The Employee Q&A Document referred to in the Form F17B, provided employees with a list of frequently asked questions and answers including explaining what an enterprise agreement is, the process of implementing an enterprise agreement and what is the better of overall test etc. The Employee Q&A Document posed the following question:

What are the benefits of being covered by the LFP Australia Pty Ltd Enterprise Agreement 2023?[19]

• [24] The response to that question in the Employee Q&A Document was as follows:

• The EA will be tested by the FWC to ensure that employees are better off overall under the EA compared with the underpinning modern award, namely the Fast Food Industry Award (FFIA).
• The EA features higher minimum wage rates compared to the FFIA (It must in order to pass the better off overall test).
• The terms and conditions of employment for current employees will be either preserved, or improved overall.

• • The EA will be accessible as a public document online from the Fair Work Commission website.[20]

• [25] The Employee Q&A Document set out further questions and answers in the following terms:

ONCE THE EA HAS BEEN VOTED ON AND LODGED FOR APPROVAL WITH THE FWC, IT MUST PASS THE 'BETTER OFF OVERALL TEST'.

THIS TEST ENSURES THAT TERMS AND CONDITIONS UNDER THE EA ARE FAIR AND LAWFUL WHEN COMPARED AGAINST THE FFIA.

IF YOU FEEL THAT YOU ARE WORSE OFF UNDER THE PROPOSED ENTERPRISE AGREEMENT, PLEASE SPEAK TO YOUR MANAGER.

WHAT IMPACT CAN AN ENTERPRISE AGREEMENT HAVE ON CURRENT RATES OF PAY?

THE EA SETS MINIMUM WAGES THAT EMPLOYEE WILL BE ENTITLED TO AND WILL NOT RESULT IN ANY REDUCTION [SIC] YOUR CURRENT HOURLY WAGE RATE.

HENCE THE EA IS ASSESSED BY THE FWC, IT WILL BE ASSESSED AGAINST THE TERMS OF THE FFIA.

IF THE EA IS APPROVED BY THE FWC, YOU CANNOT BE PAID LESS THAN THE MINIMUM RATES SET OUT IN THE EA.

• [26] The Form 17B details that on 11 and 12 December 2023, the Applicant held a group meeting with employees. According to the Applicant, the proposed Agreement, Employee Q&A Document and comparison of the modern Award and proposed Agreement (Comparison Document) was worked through in its entirety to ensure that all differences were identified for discussion. The Applicant stated that it discussed the differences between the proposed Agreement, the Award and the ipca (Western Australia) Enterprise Agreement 2010 (IPCA Agreement),[21] which applied to three employees as a result of a transfer of business. The Applicant said it invited employees to raise any questions or provide feedback they had on any of the matters discussed. The Applicant added that it answered any questions raised which included questions about pay rates, public holiday rates, junior and adult rates, special clothing allowance and meal allowance. The Applicant noted that employees who were not present at consultation meetings were given the opportunity of explanation and questions.

• [27] The Comparison Document, which was provided to the Commission, was attached to an email send by Ryanne Peet to various email addresses on 16 November 2023. That same Comparison Document included a table with one column titled 'Fast Food Industry Award 2020' and the other the 'Agreement'. Of relevance to the issue at hand are the following parts of the Comparison Document:

LFP Australia Pty Ltd Enterprise Agreement 2023

Employees principally employed to enter cold chambers or stick

dairy cases or freezer cabinets: $0.34/hour or $0.86/hour where the temperature is below 0 degrees

Where the employee is required to work more than an hour of

overtime and was not provided 24 hours notice: $15.23

If the overtime if more than 4 hours: Additional $13.76

Where the employee is required to launder their special clothing

$0.50/km for an employee primarily engaged in delivery work

$0.95/km for all other driving required for work purposes

Full-time and part-time employees % minimum hourly rate

The weekend and public holiday penalty rates are set out in the Minimum Wage Rate Schedule

1. 17.5% of the employee's minimum hourly rate of pay; or
2. The relevant weekend penalty

• [28] The 'Minimum Wage Rate Schedule' is set out at the end of the Agreement. It provides the following:

Casual Evening Penalty Rates 10:00PM to Midnight

Casual Evening Penalty Rates Midnight to 6:00am

• [29] Whilst the Minimum Wage Rate Schedule sets out the minimum wages for work performed on an Evening 10:00PM to Midnight, Evening Midnight to 6:00AM, Saturday Rate, Sunday Rate or Public Holiday Rate under the Agreement, it does not express the rate as a percentage of the 'Ordinary Wage Rate'. However, if one was to convert the amounts in the Schedule to a percentage as of 'test time' they would read as follows:

Sunday - 25% for Team Member and 50% for Supervisor and Manager

Casuals (percentage above the base rate excluding casual loading)

Sunday - 50% for Team Member and 75% for Supervisor and Manager

• [30] All of the abovementioned penalty percentages are consistent with the Award penalty rates at the 'test time'. However, where the difference lies between the Agreement and the Award, is that whilst the Award provides a percentage penalty rate on the minimum hourly rate for ordinary hours of work, the Agreement does not. The rates of pay for working on a Saturday, Sunday or Public Holiday are a fixed dollar amount whilst the Agreement is operative.

• [31] Clause 11.2 of the Agreement states that:

All wage rates for full-time and part-time employees in the Minimum Wage Rate Schedule will increase only where the applicable minimum base rate of pay under the underpinning Award exceed the wage rate in the Minimum Wage Rate Schedule.

For example, where the minimum base rate of pay under the underpinning Award for a Team Member is increased to $27, the Ordinary Rate of Pay will also be increased to $27. The Saturday, Sunday and Public Holiday rate will remain unchanged as they remain higher than the minimum base rate of pay under the underpinning Award. (bold for emphasis)

• [33] Before returning to the explanation regarding the effect of clause 11.2 and the Minimum Wage Rate Schedule in relation to penalties, it is timely to pause on the explanation in respect of the ordinary wage rates under the Agreement.

• [34] Under the Agreement, the special clothing allowance and annual leave loading has been incorporated into the ordinary wage rate. Based on a three-hour shift for a part-time or casual employee, the Agreement ordinary wage rate is above the Award for a Level 1 Team Member, based on pay rates at the time of filing the application. A basic model of a 3-hour shift showing the compensation for a Team Member at this Level, which includes aforementioned allowance and loading under the Award as compared to the Agreement, shows that under the Award the Team Member receives $82.15 and under the Agreement the employee would receive $82.58.

• [35] Using the pay rates drawn from the Award which apply after 1 July 2024 in the abovementioned example, the Agreement falls below the Award and Level 1 employees under the Agreement will be 3.12% below the Award for the aforementioned three-hour shift. This proves unproblematic in respect of the BOOT because the 'test time' is when the application is made. Further, clause 11.2 sets out that wage rates under the Agreement in the Minimum Wage Rate Schedule will increase when the applicable minimum base rate of pay under the Award exceeds the wage rate in the Agreement Schedule. Albeit I note that such effect is mandated in any event, by the operation of s 206 of the Act.

• [36] The example regarding the Level 1 classification under the Agreement has been utilised due to its relevance. The Applicant confirms no Level 2 or Level 3 employees were employed at the time the Agreement was lodged. Further, the Applicant details that at the time the application was lodged, there were employees employed as adult Level 1 and employees employed as junior employees under the following categories: (a) permanent employee aged 20; (b) permanent employee aged 16; (c) permanent employee aged 15; and (d) casual employee aged 18 (see clause 12.1 of the Agreement for junior wage rates).

• [37] I accept that the Applicant has explained to employees in the Employee Q&A Document that the proposed Agreement 'features higher minimum wage rates compared to the FFIA (It must in order to pass the better off overall test)'. That explanation did not extend to expressly inform employees that the statement is only relevant as of the 'test time' and not thereafter. However, the proposed Agreement itself explained that ordinary wage rates will increase only where the applicable minimum base rate of pay under the underpinning Award exceeds the wage rate in the Minimum Wage Rate Schedule and an example was provided.

• [38] In respect of work on Saturday, Sunday and Public Holidays employees will be paid the dollar amounts as specified in the Minimum Wage Rate Schedule. Under the Award, work performed on a Saturday, Sunday and a Public Holiday could potentially be higher than under the Agreement, once the minimum hourly rate for ordinary hours of work under the Award increase subject to the annual wage review and the relevant percentage penalties under the Award are applied to that increased minimum hour rate.

• [39] While the minimum hourly rate of pay under the Award arguably increases each year and as a consequence the minimum hourly rate of pay for hours worked on a day or time that attracts penalties under the Award similarly increases (due to the penalty rate being a percentage on the minimum hourly rate for ordinary hours of work), the effect of clause 11.2 of the Agreement is that there would be no equivalent increase to the rates of pay for work performed on Saturday, Sunday or Public Holiday under the Agreement.

• [40] This point appears to have been made by the SDA in its submissions. Namely, over the life of the Agreement whilst higher rates of pay for penalty rates would otherwise apply, the rate of pay for Saturday, Sunday and Public Holidays, will be frozen at the point of approval unless the Applicant unilaterally decides to increase these rates of pay.

• [41] The Applicant was informed that in circumstances where the wage rates and penalty rates of employees are a fundamental entitlement, the Commission was not yet satisfied that the Applicant took all reasonable steps to explain the terms of the proposed Agreement and the effect of those terms (particularly clause 11.2). An opportunity was afforded to the Applicant to file a response to the issue (whether by submission or undertaking, or both) or otherwise be heard.

• [42] The Applicant submits that it has taken all reasonable steps to explain the terms of the proposed Agreement to its employee, including meeting with employees on five to six occasions across the one store on 11, 12 and 13 December 2023 and 15, 16, and 17 April 2024, to read through the Agreement, the Employee Q&A Document and the Comparison Document in full and providing the employees an opportunity to ask questions.

• [43] The Applicant contends that by reading through the proposed Agreement in its entirety, employees were made aware of clause 11.2, which explains that all wage rates (which includes the evening, weekend and public holiday rate) would not increase until the applicable minimum base rate of pay under the underpinning Award caught up to or exceeded the wage rates in the Minimum Wage Rate Schedule. The Applicant states that this was in addition to an email sent to employees on 15 April 2024 that advised employees '[w]e have included the uniform allowance and annual leave loading into the base rate of pay so they won't be paid separately anymore.'

• [44] It is observed that on 15 April 2024, the Applicant notified the employees that the proposed Agreement had been amended and provided them with a copy of the amended version by email. The email dated 15 April 2024 stated:

I am forwarding you the new proposed enterprise agreement that was sent to me today.

The fair work commission [sic] passed similar agreements within the last couple of months as they included allowances that someone somewhere wanted included.

Providing employee's [sic] with an entitlement to use annual leave where there is an excess leave accrual.

The additional undertakings from the two approved agreements have been incorporated into the LFP Agreement and as per your instructions below, both annual leave loading and special clothing allowance have been inserted.

We have included the uniform allowance and annual leave loading into the base rate of pay so they wont [sic] be paid separately anymore. The new pay rates are on the last page of the proposed enterprise agreement. For those under 21 years the rate decreases by 10% for each year younger you are.

No ones pay rate can be less than you are currently being paid. You will get a pay increase.

• [45] In summary, the Applicant presses that:

a) a written explanation was provided to employees on how the wage rates in the proposed Agreement would not increase until the Award rates caught up;

b) an example was provided how rates in the proposed Agreement would remain at a fixed rate until the Award rates caught up;

c) the terms of the proposed Agreement were discussed with employees at the consultation meetings; and

d) all reasonable steps required to explain the terms and effects of the proposed Agreement were undertaken.

• [46] Drawing support from the decision of Allens, the Applicant contends that 'while there may have been further conceivable steps that could have been taken, that does not mean that such conceivable steps were necessarily reasonable in the circumstances.'[22]

• [47] Satisfaction as to the Applicant's compliance with s 180(5) of the Act requires me to evaluate whether, in all the circumstances, the Applicant took all reasonable steps to ensure that the terms of the proposed Agreement, and the effect of those terms, were explained to the relevant employees in a manner appropriate, taking into account the particular circumstances and needs of the relevant employees.

• [48] I am satisfied, and I find on the evidence before the Commission, that the terms of the proposed Agreement in respect of the penalty rates, were not explained with the requisite clarity required for a cohort of employees that included juniors. Clause 11.2 of the proposed Agreement and the Minimum Wage Rate Schedule was not explained by reference to the equivalent provisions in the reference Award regarding penalty rates. This had the result that a potentially detrimental term in the proposed Agreement when compared to corresponding term in the Award was not explained to the employees. The explanations as described by the Applicant, did not traverse the effect of a static penalty rate in comparison to the Award provision. Whilst clause 11.2 sets out that '[t]he Saturday, Sunday and Public Holiday rate will remain unchanged as they remain higher than the minimum base rate of pay under the underpinning Award', the comparator for these rates is not the 'minimum base rate of pay' in the underpinning Award.

• [49] Further, whilst the IPCA Agreement was said to have applied to three employees of the cohort, the Applicant's explanations regarding the terms of the proposed Agreement did not extend to a comparison between that industrial instrument and the proposed Agreement.

• [50] Turning to the explanation concerning expense-related allowances under the Agreement. By comparison, clause B2.2 of the Award sets out that in respect of expense-related allowances when there is an adjustment to the 'standard rate', the expense-related allowance will be increased by the relevant adjustment factor. The relevant adjustment factor is understood to be the percentage movement in the applicable index figure most recently published by the Australian Bureau of Statistics (ABS) since the allowance was last adjusted. The applicable index figure is the index figure published by the ABS for the Eight Capitals Consumer Price Index, as follows:

• [51] According to the SDA, there is no comparable clause in the Agreement and the explanation provided to employees (in the Employee Q&A document for the proposed Agreement) that allowances in the Agreement were incorporated 'as per the Award,' did not outline at any point the key change from the Award that they will not be increased in line with clause B2.2. From the materials filed, I am satisfied that this is the case and as such, the Applicant failed to provide explanation that the allowances for 'uniform' had been incorporated into the base rate pay and, if provided under the Award, would be subject to an adjustment in accordance with the relevant adjustment factor.

• [52] Whilst having considered the Applicant's submissions that the ordinary wage rates in the Agreement had been increased to compensate for the amortising of the special clothing allowance and that the special clothing allowance had been calculated on the basis that an employee works for a minimum period of engagement for three hours and the employee works a maximum of 38 ordinary hours per week, it is observed that the explanation provided to employees did not detail this. In circumstances where the ordinary wage rates in the Agreement were, at test time, on average, only 3-5% above the Award and the allowance was relevant to employee cohort in question, all reasonable steps, included providing a level of detail as to how the Agreement addressed what was otherwise provided by the Award in respect of the adjustment of the 'standard rate' in respect of allowances.

• [53] Having regard to all the circumstances of the case, I am not satisfied that the steps taken by the Applicant were sufficient to comply with its obligation in s 180(5) of the Act, particularly in regard to the penalty rates of pay. I do not consider the Employer's non-compliance with s 180(5) in this case to be immaterial, notwithstanding that the penalty rates of pay in the proposed Agreement exceeded, at 'test time', the base rates in the Award. Whilst the Applicant was offered the opportunity to address the issues identified by way of proffering undertakings, no undertakings were forthcoming. It follows that I am not satisfied that the Agreement has been genuinely agreed to by the employees covered by it pursuant to s 186(2)(a) of the Act. This conclusion is based on my finding that there had been a failure by the Applicant for the purposes of s 188(4A) of the Act to comply with s 180(5) in relation to the proposed Agreement.

• [54] For the sake of fulsomeness, other issues concerning the Agreement are traversed.

Sufficient interest and sufficiently representative

(2) The FWC cannot be satisfied that an enterprise agreement has been genuinely agreed to by the employees covered by the agreement unless the FWC is satisfied that the employees requested to approve the agreement by voting for it:

a) have a sufficient interest in the terms of the agreement; and

b) are sufficiently representative, having regard to the employees the agreement is expressed to cover.

• [56] Paragraph 17 of the Statement of Principles provides that in considering whether employees have a sufficient interest in the terms of an enterprise agreement as required by section 188(2)(a) of the Act, the Commission may take into account whether the employees entitled to vote on the enterprise agreement are to be paid the rates of pay provided for in the agreement.

• [57] As observed, the Employee Q&A document included a table with one column titled Fast Food Industry Award 2020 and the other the Agreement:

What impact can an enterprise agreement have on current rates of pay?

The EA sets minimum wages that employees will be entitled to and will not result in any reduction your current hourly wage rate.

When the EA is assessed by the FWC, it will be assessed against the terms of the FFIA.

If the EA is approved by the FWC, you cannot be paid less than the minimum rates set out in the EA.

• [58] The terms of the Agreement in addition to the explanation provided to relevant employees was indicative that the Agreement consisted of minimum rates of pay. This gave rise to the question of whether the employees in question had a sufficient interest in the terms of the Agreement.

• [59] In response to the issue raised, the Applicant submitted that employees employed as adult Level 1 employees (all of whom were permanent employees), at the time of lodgement, were paid the following rates: (a) $24.73; and (c) $25.00.

• [60] Employees employed as junior employees were paid the following wage rates provided at the time of lodgement:

• [61] The Applicant submits that the wage rates contained in the Minimum Wage Rate Schedule of the Agreement, if approved, provide for minimum ordinary wage rates for a Level 1 employees that, with the exception of one employee, are higher than what the employees were paid immediately prior to the vote for the Agreement. It is on that basis that the Applicant contends the employees had a sufficient interest in the Agreement.

• [62] A point of context in this matter is that the employees employed under the IPCA Agreement or under the Award at the 'test time' receive a wage increase, with the exception of one and a such it can be said that they had a stake in the Agreement. There is no suggestion in this case of the Agreement of it being some form of artifice designed to serve as an instrument that would, at some later point, provide an industrial framework to apply to a large and disparate group.

• [63] In these circumstances, the material before the Commission is sufficient to satisfy me that the employees in question had a sufficient in interest in the terms of the Agreement.

• [64] The SDA initially submitted that it had reviewed the Agreement and had identified BOOT issues which aligned to those highlighted to the Applicant by my Chambers. Those BOOT issues included: (a) the minimum engagement for part-time and casual employees; (b) overtime triggers; (c) notice of termination; (d) annual leave loading; and (e) special clothing allowance.

• [65] In addition, the SDA identified further BOOT issues, extending to: (a) no obligation to increase rates of pay; (b) public holiday arrangements; and (c) other detriments.

• [66] The SDA highlighted that the other detriments in the Agreement consisted of: (a) the employee is required to name their representative in the dispute resolution procedure (clause 31.4 of the Agreement; (b) the employee is obliged, on pain of exposure to civil penalty to return property on request on termination (clause 26.1); and (c) permitting deductions in extraordinarily wide circumstances.

• [67] By email dated 21 June 2024, the SDA submitted that notwithstanding the responsive material of the Applicant that had been filed, including undertakings, there remained issues including the following:

a) there being no comparable clause in the Agreement equivalent to clause B2.2 of the Award (expense-related allowances such as meal allowance, special clothing and motor vehicle);

b) the 'other detriments' with the exception of the undertaking that had been provided in respect of clause 31.4 of the Agreement;

c) the part-time flexibility afforded to the Applicant.

• [68] It is first necessary to say something about the application of the BOOT.

• [69] Section 193(1) of the Act provides that an enterprise agreement passes the BOOT if the Commission is satisfied, as at the test time, that each award covered employee, and each reasonably foreseeable employee, for the enterprise agreement would be better off overall if the enterprise agreement applied to the employee than if the relevant modern award applied to the employee.

• [70] The High Court has described the task of the BOOT analysis in Aldi Food Pty Ltd v SDA[23] in the following terms:

Whether the Full Bench was satisfied that an employee was better off overall required an evaluative assessment after consideration of the provisions of the award and the Agreement that may have been more beneficial to employees and those that may have been less beneficial to employees. This assessment is matter of the kind which has been described in other context as: a question, not of principal 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.

• [71] In Armacell Australia Pty and Others the application of the BOOT was explained by the Full Bench in the following manner:[24]

The BOOT, as the name implies, requires an overall assessment to be made. This requires 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.

• [72] This approach is now reflected in s 193A(2) of the Act.

• [73] The BOOT is not applied as a line-by-line analysis. It is a global test requiring consideration of advantages and disadvantages to relevant employees.[25] An enterprise agreement may pass the test even if some award benefits have been reduced, as long as overall, those reductions are more than offset by the benefits of the enterprise agreement.[26]

• [74] It is clear from the references to 'each ... employee' in s 193(1) of the Act that every employee to whom the enterprise agreement will apply, if approved, must be better off overall than if the relevant modern award applied to the employee. It is not enough that a majority or most of the employees to whom the enterprise agreement will apply, if approved, will be better off overall than if the relevant modern award applied.[27]

• [75] The SDA observed that the Agreement contained no obligation to increase the rates of pay within the Agreement, except by the application of s 206 of the Act. As has been observed, at 'test time,' the Agreement passed the BOOT and clause 11.2 effectively operates akin to s 206. It is not the case that the Agreement contains no obligation to increase rates of pay, rather increases to the rates of pay under the Agreement are limited to where the applicable minimum base rate of pay of the Award exceeds the wage rate in the Minimum Wage Rate Schedule. In these circumstances, the issue raised does not result in the Agreement not being better off overall.

• [76] Clause 6.12 and 16 states that employees may have a 2-hour minimum engagement period by written agreement. This, said the SDA, is inconsistent with the Award which does not provide for such an arrangement. The minimum engagement period in the Award for both casual and part-time employees, is 3 hours. The undertakings proffered by the Applicant addressed these issues.

• [77] As observed, clause B2.2 of the Award sets out that in respect of expense-related allowances, such as a special clothing allowance, when there is an adjustment to the 'standard rate', the expense-related allowance will be increased by the relevant adjustment factor. According to the SDA, there is no comparable clause in the Agreement. However, based on the submissions provided by the Applicant, I am satisfied that as of 'test-time' the absence of a provision providing adjustment to the 'standard rate' for a special clothing allowance, does not result in the Agreement failing the BOOT.

Hours and rostering arrangements - part-time employees

• [78] The SDA submitted that the Agreement failed to guarantee ordinary hours of work for part-time employees as was provided in the Award. The SDA noted that clause 6.5 of the Agreement provides that part time employees are to be provided a guaranteed number of hours per week or per roster cycle. In contrast at clause 10 of the Award, part-time employees are to be provided 'reasonably predictable hours of work' as well as an agreement on the regular pattern of work including: (a) the number of ordinary hours to be worked each day; and (b) the days of the week on which the employee will work; and (c) the actual times at which the employee will start and finish work each day; and (d) when meal breaks may be taken and their duration; and (e) the daily engagement is a minimum of three consecutive hours; and (f) that any variation will be in writing, including by any electronic means of communication (for example, by text message).

• [79] Regarding the flexibility that the Applicant had afforded itself in respect of part-time employees, the SDA submitted that a similar clause was considered in Allens. However, the SDA said that the circumstances here had to be contrasted with those in Allens due to the inclusion of clauses 6.9 and 6.10 in the Agreement.

• [80] The Respondent observed that the Full Bench in Allens accepted that the part time provision afforded greater flexibility to the employer in Allens, however there was a significant countervailing factor in that the employee had a unilateral right to amend their availability and the employer was compelled to roster the guaranteed hours within the employee's availability. This may be contrasted with the Award where agreement is reached on commencement of employment on the number of hours to be worked each week and the days and start/finish times of such hours.

• [81] The SDA submitted that unlike the enterprise agreement considered in Allens the employees covered by the Agreement do not have a unilateral right to amend their availability due to the application of clause 6.9 and 6.10, where an employee can only change their availability if the employer can accommodate it. Further, said the SDA, clause 6.9(a) establishes a unilateral right for the Applicant to reduce an employee's guaranteed hours if they cannot accommodate their availability.

• [82] Clause 6.9 of the Agreement provides:

If you vary your Availability and as a result we cannot accommodate your Guaranteed Hours:

(a) your Guaranteed Hours agreed under Clause 6.6(a) ceases to apply; and

(b) we will agree with you on a new set of Guaranteed Hours under Clause 6.6(a).

• [83] Clause 6.10 of the Agreement provides:

If we cannot reach an agreement in accordance with Clause 6.9 then we will revert to the most recently agreed Guaranteed Hours and Availability.

• [84] Having considered the operation of clauses 6.5 to 6.12 of the Agreement, it is evident:

a) any change to a part-time employee's Guaranteed Hours is by written agreement between the employer and employee (clause 6.7);

b) an employee can change their Availability each week in writing to the employer (clause 6.8);

c) if the employee changes their Availability and the employer cannot accommodate the employee's Guaranteed Hours, those hours will cease to apply (clause 6.9(a)) and the employer and employee will agree with a new set of Guaranteed Hours and Availability (clause 6.9(b));

d) If an agreement cannot be reached on the Guaranteed Hours, then the employee and employer will revert to the most recently agreed Guarantee Hours and Availability.

• [85] It is further evident that clause 6.9 and clause 6.10 operate such that if an employee decides to vary their Availability under clause 6.8 of the Agreement, noting that there is no obligation on an employee to do so, and the Guaranteed Hours are unable to be accommodated by the employer, the safeguard in clause 6.10 of the Agreement operates such that the employee will work their original Guaranteed Hours in accordance with their Availability.

• [86] This arrangement is also, in effect, no different to the arrangement under the Award,

in that any failure to enter into an agreement to vary a regular pattern of work under the Award would result in the employee working their original hours of work.

• [87] I consider that the hours and rostering arrangements for part-time employees under the Agreement, when considered with other terms, result in the employees being better off overall when compared to the Award. Clauses 6.5 to 6.10 of the Award provide both the employer and employee flexibility regarding hours of work, with the safeguard of clause 6.10 for the employee.

• [88] The SDA contends that the Agreement is unworkable in respect to right for permanent employees to be absent from work on public holidays and the entitlement to be paid for their regular hours. The SDA states that this is because the Agreement does not provide for an agreed pattern of work for part-time employees, with the part-time employee having to provide their availability each week. The submission of the SDA is misguided. Clauses 6.6 to 6.8 of the Agreement provide the employer and part-time employee are to agree in writing on the number of hours of work which is guaranteed to be provided and paid to the employee each week and the day of the week on which those hours will be worked and the hours on those day for which the employee is available. Any change to the Guaranteed Hours must be with the agreement of the employee and it is the employee that is able to change their Availability each week - although they are not compelled to do so under the Agreement.

• [89] Clause 21.2 provides that if you are a part time employee who is absent on a public holiday that falls on a day you would have normally worked, you will be paid at your Ordinary Wage Rate for the ordinary hours you would have otherwise worked on that day.

• [90] The SDA submits that if a part-time employee is unavailable to work on 25 December, although it may have been a day the part-time ordinarily worked, they may not be paid for this day. In respect of clause 21 of the Agreement, which refers to 'a day you would have normally worked', this is not defined - especially in the context of a lack of an agreed pattern of work for the part-time employee. However, the Agreement provides for an agreed pattern of work as already detailed. A part time employee who, based on availability, ordinarily works and is rostered to work on a day of the week which may fall on a public holiday, is entitled to payment pursuant to clause 21.2. The employees remain better off overall notwithstanding clause 21.2.

• [91] In respect to clause 21.1 which provides: 'As we generally trade on public holidays, we may reasonably ask that you work on a public holiday', the SDA presses that the clause is an implied obligation to work on a public holiday unless otherwise directed not to work that day. I consider this issue to be better characterised as an issue concerning the National Employment Standards (NES), and in this respect I note that the Agreement contains a NES precedent clause at clause 3.3 of the Agreement that addresses the issue.

• [92] The SDA submitted that the Agreement contained other detriments including the following:

a) the employee is required to name their representative or advocate in the dispute resolution clause (see clause 31.4 of the Agreement);

b) the employee is obliged, on pain of exposure to civil penalty to return property on request or on termination of employment (see clause 26.1 of the Agreement); and

c) permitting deductions in extraordinarily wide circumstances.

• [93] With regard to the other detriments as identified by the SDA, in short, the requirement for an employee to name their representative, is a neutral provision such that it is neither benefit nor detriment. Regarding deductions, such term would be unenforceable unless permitted under the provisions of the Act. Lastly, a requirement that an employee return the employer's property is not more than a statement reflective of the common law position, and I consider it highly unlikely that the Applicant would seek to pursue the return of property by the institution of civil remedy proceedings against an employee.

• [94] Clause 10(1)(c)(i) of the Agreement provides overtime for the work of full time and part time employees 'in excess of 5 days in one week (or 6 days by mutual agreement)'. The clause appears detrimental when compared to clause 20.3 of the Award. However, the undertaking proffered addressed this issue. As to the other overtime issue agitated by the SDA regarding overtime on a shift swap, I consider the issue a neutral BOOT consideration.[28]

• [95] As observed, I am not satisfied the Agreement has been genuinely agreed to by the employees covered by it pursuant to s 186(2)(a) of the Act. This conclusion is based on my finding that there had been a failure by the Applicant for the purposes of s 188(4A) of the Act to comply with the mandatory pre-approval requirements in s 180(5) in relation to the proposed Agreement. Whilst the Applicant was informed of this concern, the issue was not remedied by provision of an undertaking or by reliance on s 188(5)(aa) of the Act.

• [96] For completeness, if it were the case that the Applicant sought to rely on s 188(5)(aa) to contend that, notwithstanding the error made, the Agreement had nevertheless been genuinely agreed, I am not satisfied that the error in question constituted a minor procedural or technical error given my observation that the wage rates and penalty rates of employees in this case were a fundamental entitlement. As to whether an undertaking would remedy the Applicant's non-compliance with s 180(5) of the Act, I simply observe that I would decline to exercise my discretion to accept the undertakings proffered given the Applicant did not take any steps to explain the effect of clause 11.2 in respect of the penalty rates in the Minimum Wage Rate Schedule.

• [97] It therefore follows, the application for approval of the Agreement is dismissed.

[1] [2016] FWCFB 8413, [26]-[28].

[2] [2024] FWCFB 48.

[6] Collinsville [2014] FWCFB 7940, [48] & [75].

[7] Shop, Distributive and Allied Employees Association v Allen Family Pty Ltd T/A Subway Clare, Subway Findon, Subway Broken Hill, Subway Kadina, Subway Port Adelaide, Subway Port Pirie [2024] FWCFB 48, [76] (Allens).

[8] Fair Work Act 2009 (Cth), s 193(6).

[9] MA000003.

[10] [2024] FWC 1074 [18].

[11] One Key Workforce v Construction Forestry Maritime Minig and Energy Union [2018] FCAFC 77 (2018) 262 FCR 527 [115].

[13] Construction, Forestry, Maritime, Mining and Energy Union v Karijini Rail Pty Ltd [2020] FWCFB 958 [59].

[14] [2019] FWCFB 6960 [35].

[15] Application by BGC Contracting Pty Ltd T/A BGC [2018] FWC 1466, [43] as cited in [2024] FWCFB 48, [81].

[16] CFMMEU v Ditchfield Mining Services Pty Limited [2019] FWCFB 4022 [71]-[72].

[17] Form F17B - Employer's declaration in support of an application for approval of a single-enterprise agreement (other than a greenfields agreement) notification time on or after 6 June 2023.

[18] Digital Hearing Book, 68 (DHB).

[21] [2010] FWAA 8971; AE882340 PR504199.

[23] [2017] HCA 53, [99].

[24] [2010] FWAFB 9985, [41].

[25] SDA v Beechworth Bakery Employee Co Pty Ltd [2017] FWCFB 1664 [12]; s 193A(2) of the Act.

[26] Re Australia Western Railroad Pty Ltd T/A ARG -A QR Company [2011] FWAA 8555at [8]; NTEIU v University of New South Wales [2011] FWAFB 5163, [47].

[27] Loaded Rates Agreements [2018] FWCFB 3610, [100].

[28] Shop, Distributive and Allied Employees Association v Allen Family Pty Ltd T/A Subway Clare, Subway Findon, Subway Broken Hill, Subway Kadina, Subway Port Adelaide, Subway Port Pirie - [2024] FWCFB 48, [54]-[58].

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