Fair Work Act 2009_

s.185 - Application for approval of a single-enterprise agreement

Application for approval of the Scott's Transport Goulburn Valley Enterprise Agreement 2013.

[1] This decision concerns an application made under section 185 of the Fair Work Act 2009 (the Act) for the approval of a single enterprise agreement. The application has been made by Scott's Transport Industries Pty Ltd (Scotts or the company). The title of the agreement is the Scott's Transport Goulburn Valley Enterprise Agreement 2013 (the Agreement)

[2] The application is opposed by the Transport Workers' Union of Australia (TWU) which was a bargaining representative for the Agreement.

[3] The matter was listed for a Directions hearing by telephone link on 13 December 2013. At that hearing the company was represented by Mr R Kuczmarski, Group Human Resources Manager for the Scott Group of Companies. The TWU was represented by Mr H Smith, Industrial Officer.

[4] A timetable was put in place for the filing and exchange of written material. The material from the company consists of its F16 and F17 and written submissions dated 3 January and 20 January 2014. The material from the TWU consists of its F18 in which it sets out in detail its grounds of objection to approval of the Agreement, a clarifying email dated 22 November 2013, additional material dated 20 December 2013 and written submissions dated 17 January 2014. I have had regard to all of the material provided by both the company and the TWU.

[5] There is an existing enterprise agreement in place, the Scott's Transport Goulburn Valley Enterprise Agreement 2010 (the 2010 Agreement). This agreement was approved on 10 June 2010 and had a nominal expiry date of 9 June 2012.

[6] Before outlining the submissions of the parties I note that the F18 raised an issue about the company's response to Q2.16 in its F17. In its submissions of 3 January 2014 the company notes that its response was an error and that the answer to the question should have been "no". I accept that is the case. The error is an obvious one.

[7] The main thrust of the TWU submissions is that the Agreement fails the Better Off Overall Test (the BOOT). No issue is raised in relation to the legislative requirements concerning pre approval steps including the vote of the employees.

[8] The union submits that the company's reliance upon the Road Transport (Long Distance) Award 2010 (the Long Distance Award) as setting the comparison for conditions in the Agreement is wrong. It refers to clause 3.1 "Parties Bound" of the Agreement and notes that it appears that the work is overwhelmingly local work. As a consequence, the appropriate award for the purposes of the BOOT is the Road Transport and Distribution Award 2010 (the Distribution Award).

[9] The union refers to the definitions in clause 3 of the Long Distance Award and, in particular, to the definitions of "interstate operation" and "long distance operation". Reference is also made to clause 4.7 which deals with the situation where an employer is covered by more than one award. The union also refers to clauses 10.3(d) and 13.6 of the award.

[10] The TWU submits that only one award can be used for the purposes of the BOOT and, in this instance, that award should be the Distribution Award. The union notes that this would not prevent the company from using the Long Distance Award for trips which would legitimately come under that award.

[11] The TWU submits that another area of concern is that the Agreement only provides for wage increases of $11.41 per week which undermines the provisions of the Long Distance Award.

[12] A third issue raised by the TWU concerns the spread of hours in the Agreement which is 5am to 7pm. The union notes that this is greater than the span of 5:30am to 6:30pm provided for in the Distribution Award.

[13] The TWU submits that it has a particular concern about the trip rates set out in Attachment A to the Agreement. It raises issues about the rates to be paid where there are multiple journeys within a single trip and the rates to be paid to Grade 6 drivers being less than the relevant rates in the Long Distance Award.

[14] The additional written material provided on 20 December 2013 specifically deals with the issue of Attachment A. The union notes that most of the trips identified in the Attachment involve multiple journeys and may involve more than one loading/unloading. The TWU also notes that, although the Long Distance Award uses a divisor of 75 kilometres per hour to calculate the hourly driving rates, the Agreement relies upon a divisor of 85 kilometres per hour for Grade 6 drivers and 82 kilometres per hour for those at Grade 8. A detailed comparison of the rates for various trips is provided. This identifies that the rate to be paid under the Agreement for four specific trips is less than the loading/unloading rate under the award for Grade 6 and Grade 8 drivers. Those trips are to Bridgewater, Bendigo, Strathmerton and Pakenham.

[15] In the written submissions dated 17 January 2014 the TWU notes that its comparison tables referred to in the previous paragraph were for the purpose of converting the trip rates in the Agreement back to the cents per kilometre rates under the Long Distance Award.

[16] The union reiterates its earlier submissions that the only award for the purposes of the BOOT for this Agreement should be the Distribution Award. It notes that the company has acknowledged that the Agreement covers 30 local employees based at Kyabram and Shepparton.

[17] The union submits that there are sound reasons why the Distribution Award operates on the basis of an hours and overtime regime including penalties. It also has a spread of hours. The Long Distance Award has a totally different payment structure based on a cents per kilometre or hourly driving method payment and operates on a 24 hours/7 days a week basis. Because of the nature of the trips undertaken it presupposes that drivers will average 75 kilometres per hour.

[18] The union notes that the Agreement rates are also based on an average of 75 kilometres per hour. It submits that this does not take into account the time of day or day of the week when the journey is undertaken which would attract various penalties and benefits under the Distribution Award. Neither does it allow for variables such as drivers being delayed in loading or unloading at warehouses or having to undertake numerous local deliveries.

[19] The TWU notes that the company's submission of 3 January 2014 had indicated that the payments for the Bridgewater, Bendigo, Strathmerton and Pakenham trips, referred to in paragraph [14] above, were to be in addition to the Goulburn Valley/Melbourne/Goulburn Valley rate. However, the union submits that there is nothing in the Agreement to support this.

[20] The TWU reiterates its earlier submission that, if the Long Distance Award is to be used for the purposes of the BOOT, regard should be had to the definitions in clause 3.1, especially "interstate operation" and "long distance operation".

[21] The union describes the Agreement as "substandard". It submits that it had opposed a previous agreement which had been lodged by the company and notes that the application was ultimately withdrawn. A copy of that agreement and related material is provided.

[22] The union notes that it has not applied to be covered by the Agreement and submits that the Agreement should not be approved.

[23] In its F17 the company indicates that there are two relevant modern awards which cover it in relation to employees to be covered by the Agreement, the Distribution Award and the Long Distance Award. It also notes that there are two relevant pre-reform awards, the Transport Workers Award 1998 and the Transport Workers Long Distance Drivers Award 2000. Collectively these awards are the reference instruments.

[24] The company also provides a table showing how the classifications under the Agreement relate to those in the modern awards. The classifications in the Agreement are the same as those in the Distribution Award but differ from those in the Long Distance Award.

[25] The company indicates that the Agreement contains terms or conditions of employment which are more beneficial than those in the reference instruments. It identifies only one such term or condition. It says that the rates of pay are in advance of the reference instruments. The company says that there are no terms or conditions in the Agreement which are less beneficial than the awards.

[26] In its submissions dated 3 January 2014 the company notes that the Agreement covers 30 local employees who work out of the company's depots at Kyabram, 19 employees, and Shepparton, 11 employees.

[27] The company responds to the TWU submission that the Distribution Award is the only relevant award for the purposes of the BOOT. It provides a table which compares the rates and hours in the Distribution Award with the trip rates in Attachment A to the Agreement. The company submits that columns 10 and 12 of the table demonstrate that there is a substantial difference between the award rates and the Agreement rates, in each case in favour of the latter.

[28] The company notes the TWU concern about the Bridgewater, Bendigo, Strathmerton and Pakenham rates and states that these are added on to the Goulburn Valley to Melbourne round trip and, consequently, the rates for that trip.

[29] The company questions Attachment A of the TWU submission of 20 December 2013. I note that mention is made of an Attachment B to that submission however that appears to be intended to be a reference to the second page of Attachment A.

[30] The company also provides a further table which compares the trip rates in the 2010 Agreement with those which are in Attachment A to the Agreement. It submits that the table reflects the fact that the rates in Attachment A are more than 3% higher than those in the 2010 Agreement.

[31] The company submits that the rates in Attachment A are in excess of the awards and have been adjusted each year in line with annual award wage reviews.

[32] The company submits that the spread of hours under the Agreement is consistent with clause 22.3 of the Distribution Award which provides for employees to agree by majority to alter the span by one hour either side of the 5.30 am to 6.30 pm span in that award.

[33] The company states that it provides an undertaking that the cents per kilometre rate for all trips at the Grade 6 classification will be 0.3709 cents to match the award rate.

[34] In its written submissions dated 20 January 2014 the company contends that the TWU submissions of 17 January do not address the calculations provided by the company in its earlier material. Scotts submit that the TWU has not considered the actual working conditions under the Agreement.

[35] The company submits that the employees typically work Monday to Friday with minimal Saturday work. Any Saturday work is paid under the hours and overtime regime as provided for in clause 10.3.1 of the Agreement. The company submits that employees do not work any afternoon or night shifts.

[36] The company notes that its earlier submissions which compared the Agreement rates with the Distribution Award had not been challenged by the TWU. It takes issue with the TWU's suggestion that the Agreement is substandard and notes that the format of the Agreement is the same as those instruments which have been in place at the enterprise since 2003, several of which have been "signed off" by the union. The company submits that there has been minimal change to the workforce since the previous agreement.

[37] The company submits that the question of the other agreement referred to by the TWU is not relevant. It notes that wage increases which are due to employees under the Agreement are being delayed and urges that the Agreement be approved.

[38] The company offers an undertaking that the monetary value of the Bridgewater, Bendigo, Strathmerton and Pakenham trips will be added to the Goulburn Valley/Melbourne round trip rates when the trip includes one of those four destinations.

[39] The company reiterates its earlier undertaking concerning the rate for Grade 6 drivers referred to in paragraph [33] above. I note that the rate proposed in the 20 January submissions differs from that put earlier and may be a typographical error. The earlier rate and that which is in the Long Distance Award is 0.3709 cents per kilometre whereas the submissions of 20 January note the rate as 0.3907 cents.

[40] Section 186 of the Act provides that the Fair Work Commission (FWC) must approve an enterprise agreement if the requirements of the section and section 187 are met. Section 186(2)(d) provides that FWC must be satisfied that the enterprise agreement passes the BOOT. The nature of the BOOT is set out in section 193 of the Act. Section 193 relevantly provides that:

"(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...

(4) An award covered employee for an enterprise agreement is an employee who:

(b) at the test time, is covered by a modern award (the relevant modern award) that:

(ii) covers the employee in relation to the work that he or she is to perform under the agreement; and

(5) A prospective award covered employee for an enterprise agreement is a person who, if he or she were an employee at the test time of an employer covered by the agreement:

(b) would be covered by a modern award (the relevant modern award) that:

(ii) would cover the person in relation to the work that he or she would perform under the agreement; and

(6) The test time is the time the application for approval of the agreement by the FWC was made under section 185.

FWC may assume employee better off overall in certain circumstances

(7) For the purposes of determining whether an enterprise agreement passes the better off overall test, if a class of employees to which a particular employee belongs would be better off if the agreement applied to that class than if the relevant modern award applied to that class, the FWC is entitled to assume, in the absence of evidence to the contrary, that the employee would be better off overall if the agreement applied to the employee."

[41] In order to determine the relevant modern award for the purposes of the BOOT it is necessary to consider the terms of the Agreement itself. There appears to be some tension between the coverage of the Agreement as set out in Clause 3 and Attachment A which sets out the rates of pay for designated trips as well as depot rates.

[42] Clause 3 provides that the Agreement is made between the company and its employees "engaged in warehousing, yard staff, local and intrastate driving operations engaged in the Goulburn Valley". In contrast, many of the designated trips in Attachment A involve interstate journeys.

[43] Clause 4 of the Agreement provides that it is to be read and interpreted wholly in conjunction with both the Distribution and Long Distance Awards but that, in the event of an inconsistency, the Agreement is to take precedence to the extent of the inconsistency. Consequently, if the Agreement is silent on a term or condition which is in the relevant award the award provision will apply.

[44] I disagree with the TWU that only one award can be used for the purposes of the BOOT. As section 193 provides, the relevant modern award is one that is in operation, that covers the employee in relation to the work he or she is to perform under the Agreement and that also covers his or her employer. There is no question that both the Distribution and the Long Distance Awards are in operation. As I understand it, neither is there an issue that both awards cover the employer in the sense that the company operates in the road transport industry undertaking both long distance and local operations.

[45] The main question is which award covers the employees in relation to the work they are to perform under the Agreement. In order to answer this question it is necessary to consider the coverage clauses of the awards. Clause 4.1 of the Distribution Award provides that it is an industry award covering employers in the road transport and distribution industry and their employees in the classifications set out in clause 15 to the exclusion of any other modern award. There is no suggestion that the employees do not fall within the classification structure of the award.

[46] Importantly for present purposes, clause 4.2 then provides that the award does not cover employers and employees covered by, among other things, the Long Distance Award "whilst undertaking long distance operations". The definition of a "long distance operation" is identical in both awards. It means "any interstate operation" or "any return journey where the distance travelled exceeds 500 kilometres and the operation involves moving livestock or materials ... "

[47] Both awards also contain identical definitions of an "interstate operation". That definition provides that the distance involved must exceed 200 kilometres for any single journey. The operation is to be one which involves a vehicle moving livestock or materials from a principal point of commencement in one State to a principal point of destination in another.

[48] Although clause 3 of the Agreement states that it covers local and intrastate driving operations, Attachment A makes it clear that it is wider than that. Eight of the designated trips could potentially be interstate operations as they include interstate destinations as far afield as Bathurst. In addition, on the information provided by the company in its submissions of 3 January 2014, thirteen of the trips from the Kyabram depot and the same number, though not the same trips, from the Shepparton depot, involve journeys of greater than 500 kilometres.

[49] It would appear therefore that when an employee is undertaking a "long distance operation", be it interstate or of a distance exceeding 500 kilometres, the Long Distance Award is the relevant award for the BOOT. In all other instances, and for those employees who are engaged only in local duties, the Distribution Award is the relevant instrument.

[50] It is now necessary to consider whether the Agreement passes the BOOT when compared with both modern awards. As noted earlier, the Agreement is to be read in conjunction with both awards and it is only in the event of an inconsistency that the Agreement prevails. As the Agreement does not deal with allowances it would appear that allowances in the awards would apply, as and when they are relevant. Similarly, the Agreement is silent on the issue of casual loadings. Consequently it would seem that the relevant award provision would apply.

[51] The depot rates of pay in the Agreement are approximately 1.6% higher than the equivalent rates under both the Long Distance and the Distribution Awards. The rates of pay for most of the designated trips are also higher as clarified in the table provided by the company as an attachment to its written submissions of 3 January 2014. The areas where the rates are not higher are the Bridgewater, Bendigo, Strathmerton and Pakenham amounts and the cents per kilometre rate for Grade 6 employees engaged in trips not specifically listed in Attachment A.

[52] The company has offered undertakings in respect of each of these categories. The undertaking in relation to the Bridgewater etc trips is that the rates for those destinations will be added to the Goulburn Valley/Melbourne return journey. I am satisfied that such an undertaking will result in employees who carry out such trips being better off than under the awards.

[53] However, the other undertaking will only have the effect of bringing the Grade 6 employees up to the award rate. The BOOT requires that they are to be "better off overall". The company has not suggested that any other provision in the Agreement will help tip the balance in the employees' favour. Nevertheless, I consider it appropriate to provide the company with a further opportunity to decide whether it is prepared to adjust the cents per kilometre rate for the Grade 6 drivers to an amount which is greater than the award rate as it has for Grade 8 drivers. Of course if the rate set out in the proposed undertaking contained in the 20 January submissions is not an error then that would be higher than the award.

[54] The span of hours in the Agreement has been identified as a reduced entitlement. However, the Distribution Award permits the spread of hours of 5.30am to 6.30pm to be altered in any depot or yard by one hour at each end by agreement between the employer and the majority of employees concerned.

[55] The union has submitted that the wage increases provided for under the Agreement will undermine the awards. Although it is not entirely clear, I understand this may relate to the issue of future award increases. However, as set out above, section 193 provides for the BOOT to be applied as at the date the application is made. Consequently, any prospective award increases are not relevant to the BOOT.

[56] Subject to an appropriate undertaking in relation to the concerns which I have set out in paragraph [53] above and the formalisation of the undertaking referred to in paragraph [52], I consider that, on an overall assessment, the Agreement passes the BOOT. It is now up to the company to consider whether it wishes to provide appropriate undertakings.

[57] Section 190(4) of the Act requires that FWC must not accept an undertaking unless the views of the known bargaining representatives have been sought. Upon receipt of any undertakings from the company the views of the TWU will be sought. I note that the TWU does not want to be covered by the Agreement.

Transport Workers' Union of Australia 17 January 2014.

Scott's Transport Industries Pty Ltd 20 January 2014.

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