//
[48]
[2024] FWCFB 461
General information, not legal advice.
Fair Work Commission (Full Bench)
2024-12-17
Original judgment source is linked above.
[2024] FWCFB 461 [The Early Childhood Education and Care Multi-Employer Agreement 2024-2026 has been varied under section 216AA to add employers and their employees to the agreement's coverage. For the full list of employers covered by this agreement, please see the Early childhood education and care supported bargaining agreement page on our website.]
s.185 - Application for approval of a multi-enterprise agreement
EARLY CHILDHOOD EDUCATION AND CARE MULTI-EMPLOYER AGREEMENT 2024-2026
Application for approval of the Early Childhood Education and Care Multi-Employer Agreement 2024-2026 - full reasons for approval decision.
[1] The United Workers' Union (UWU) has made an application for the approval of the Early Childhood Education and Care Multi-Employer Agreement 2024-2026 (ECEC Agreement). The application was made pursuant to s 185 of the Fair Work Act 2009 (Cth) (FW Act).
[2] The ECEC Agreement is the first supported bargaining agreement made since the FW Act was amended by the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth) (SJBP Act). As such, the approval application was allocated to a Full Bench for consideration and approval. The ECEC Agreement will initially cover 60 employers and approximately 12,000 employees.
[4] The SJBP Act introduced a new 'supported bargaining stream' for multi-enterprise agreements that replaced the 'low-paid bargaining stream'. The key provisions relating to supported bargaining are in Division 9 of Part 2-4 of the FW Act (ss 241-246). The objects of this division are:
Objects of this Division
(a) to assist and encourage employees and their employers who require support to bargain, and to make an enterprise agreement that meets their needs; and
(c) to address constraints on the ability of those employees and their employers to bargain at the enterprise level, including constraints relating to a lack of skills, resources, bargaining strength or previous bargaining experience; and
(d) to enable the FWC to provide assistance to those employees and their employers to facilitate bargaining for enterprise agreements.[2]
[5] Section 242 allows certain parties to apply for a supported bargaining authorisation. Upon such an application being made, s 243 requires the Commission to make a supported bargaining authorisation in relation to a proposed multi-enterprise agreement if it is appropriate for the employers and employees covered by the agreement to bargain together and the Commission is satisfied that at least some of the employees who will be covered by the agreement are represented by an employee organisation. In determining whether it is appropriate for the employers and employees covered by the proposed agreement to bargain together, the Commission must have regard to the prevailing pay and conditions within the relevant industry or sector (including whether low rates of pay prevail in the industry or sector), whether the employers have clearly identifiable common interests and other matters specified in s 243(1)(b).
[7] In the course of making the authorisation the Full Bench accepted the uncontested evidence of the parties concerning the pay rates and conditions in the ECEC sector, including:
(a) wages in the sector are generally the same as, or close to, the minimum award rates of pay in the Children's Services Award 2010 or the Educational Services (Teachers) Award 2020. Pay rates for 57.8 per cent of employees in the ECEC sector are derived from the applicable award, and pay rates for a further 20.9 per cent are between 0.01 per cent and 10 per cent above the award rate of pay;
(b) while low rates of pay prevail, most employees in the ECEC sector have an ECEC sector-related qualification, with 72 per cent holding a Certificate III, Certificate IV, Diploma or Advanced Diploma in Early Childhood Education and Care (or equivalent); and
(c) approximately 12 per cent of employees are bachelor's degree-qualified teachers.
[8] In approving the supported bargaining authorisation, the Full Bench also accepted evidence regarding the sector more broadly and its reliance upon Commonwealth Government funding:
[51] The employers specified in the application who would be covered by the proposed agreement clearly have one overriding common interest, namely, they all operate long day care businesses in the ECEC sector. This of itself means that there is substantial similarity in the businesses which they operate. It also gives rise to a number of concomitant common interests:
(1) They are all covered by the CS Award and the EST Award.
(2) They are all covered by a common regulatory framework, the 'National Quality Framework' (NQF). The NQF consists of the following elements:
(a) a model national law, the Education and Care Services National Law 2010, which has been enacted in each State and Territory, and the Education and Care Services National Regulations made pursuant to the model law;
(b) The National Quality Standard, which benchmarks services provided by employers in the ECEC sector by reference to seven quality areas, namely:
• collaborative partnerships with families and communities; and
(e) a requirement for ECEC services to provide an educational program based on one of the two approved learning frameworks (the Early Years Learning Framework or, in Victoria, the Victorian Early Years Learning and Development Framework);
(f) regulatory bodies in each State and Territory which are responsible for the approval, monitoring and quality assessment of ECEC services; and
(g) the Australian Children's Education and Care Quality Authority, which guides the implementation of the NQF, works with the State and Territory regulatory authorities and promotes national consistency.
(3) They are subject to common arrangements for the funding of long day care services by the Commonwealth. The funding mechanism is the Child Care Subsidy (CCS), which is paid directly to providers and passed on to families as a fee reduction. To receive the CCS, ECEC service providers must be approved by the relevant State or Territory regulatory authority and must otherwise be NQF compliant. The amount of fee reduction is dependent on the family's income and number of pre-school-aged children in an ECEC service, with families earning less than $80,000 receiving a 95 per cent fee reduction. The CCS is the largest funding source for long day care providers. Because payment of the CCS is based on an hourly rate cap which indicates the maximum amount which will be subsidised by the Commonwealth, this operates as a practical constraint on the amount which long day care providers can charge families and, in turn, constrains the wages and conditions which providers can negotiate with their employees.
[9] The evidence before the Full Bench indicated that there had been a relatively low uptake of enterprise bargaining in the ECEC sector due to a number of factors, including that a large proportion of long day care operations are small in size and lack the management capacity and other resources to engage in bargaining, and the funding and pricing constraints referred to above.
[10] The Full Bench concluded:
[58] On the basis of our consideration of the matters specified in s 243(1)(b) of the FW Act, we are satisfied that it is appropriate for all of the employers and employees that will be covered by the proposed multi-enterprise agreement to bargain together. In summary:
[59] These matters overwhelmingly favour the making of a supported bargaining authorisation. The only matter which we have been able to identify as weighing against the making of the authorisation in the terms applied for is the inclusion of G8, which is an anomalously large employer. However, having regard to the fact that G8 shares the identified common interests with the other specified employers, this matter is not sufficient to render other than appropriate that all of the specified employers, including G8, should be allowed to bargain together.
(a) work covered by the Children's Services Award 2010 occurring in a long day care setting, but not including the following types of work or work performed in the following settings:
(b) work covered by the Educational Services (Teachers) Award 2020 in a long day care setting, but not including the types of work or work performed in the settings outlined in item 2(a)(i) - (viii) above; and
(c) work performed in the ECEC sector in a long day care setting by a qualified chef or cook not otherwise covered by the Children's Services Award 2010 or the Educational Services (Teachers) Award 2020.
[12] It is worth noting that a different Full Bench of the Commission is currently reviewing the wage rates contained in the Children's Services Award 2010 as part of the Gender Undervaluation - Priority Awards Review. Clause 11.13 of the ECEC Agreement allows for increases arising from that review to be absorbed.
[13] The supported bargaining stream under the FW Act allows parties covered by a supported bargaining authorisation to bargain together for a single agreement. During the period the authorisation applies, the only kind of enterprise agreement the employer may make with employees specified in the authorisation is a supported bargaining agreement, and the employer must not bargain with those employees for any other kind of enterprise agreement (per s 172(7)). Section 172(7) had no equivalent in the previous low-paid bargaining scheme that existed prior to the SJBP Act.
[14] Section 246 allows the Commission to provide assistance to bargaining representatives in the supported bargaining process, including convening conferences and, to the extent necessary, requiring relevant persons to attend a conference if the Commission is satisfied that the person exercises such a degree of control over the terms and conditions of the employees who will be covered by the agreement that their participation is necessary for the agreement to be made.
[15] A supported bargaining agreement is made when, pursuant to s 182(2), the employees of each of the employers that will be covered by the agreement have been asked to approve the agreement under s 181(1), those employees have voted on whether to approve the agreement and a majority of the employees of at least one of those employers who cast a valid vote have approved the agreement.
[16] Section 184 provides a safety mechanism in circumstances where a proposed agreement is not supported by a majority of employees of a particular employer.
[17] Once approved, a supported bargaining agreement may be varied to add employers and employees with the consent of employers and their affected employees, subject to certain procedural requirements, including a vote of affected employees (see ss 216A-216AF). A supported bargaining agreement can also be varied to cover other employers without the consent of those employers, but only on application by an employee organisation (see ss 216B-216BC).
[18] The supported bargaining process for the ECEC sector, which proceeded following the making of the authorisation set out above, included approximately 20 conferences convened by Deputy President Easton in Sydney, Melbourne and online. There were six groups of parties who attended each conference:
(a) UWU;
(b) AEU;
(c) IEUA;
(d) Australian Childcare Alliance (ACA) initially representing 41 private operator employers;
(e) Community Early Learning Australia Limited and Community Child Care Association representing 14 and eight community group employers respectively; and
(f) G8 Education Limited (G8).
[20] Commonwealth Government representatives attended several meetings, which assisted the process significantly. In this regard, the supported bargaining process provided a helpful forum for the bargaining representatives to liaise with the government as a group and for the government representatives to see in real-time the progression of the supported bargaining process.
[21] There were many common interests and priorities across the whole bargaining group - particularly the common goal of delivering affordable, funded improvements in conditions for workers in the ECEC sector. However, there were many areas in which the interests of the parties did not align. It is not necessary or appropriate to be specific about these differences. However, it is important to note the positive and productive way in which the parties identified, debated, considered, evaluated, re-evaluated and resolved these areas of difference in order to progress the bargaining.
[22] Four employers covered by the Authorisation and represented by ACA did not put the ECEC Agreement to a vote because their particular circumstances changed after the authorisation was made. Those four employers are not party to the ECEC Agreement and are not named in Part G of the ECEC Agreement.
[23] The ECEC Agreement covers the employers listed in Part G and their employees in the classifications listed in Schedules C and D who are employed by those employers in the ECEC sector (per Clause 5.1).
[24] The ECEC sector is defined in clause 3:
children's services and early childhood education sector means the sector of long day care, occasional care (including those occasional care services not licensed), nurseries, children's service centres, day care facilities, family based children's service, out-of-school hours care, vacation care, adjunct care, in-home care, kindergartens and preschools, mobile centres and early childhood intervention programs.
[25] The underpinning awards are the Children's Services Award 2010 and the Educational Services (Teachers) Award 2020 (together, Awards). Clause 5.6 of the ECEC Agreement provides that no employee will receive a reduction in their rate of pay and conditions as a result of joining the ECEC Agreement.
[26] The Commonwealth Government has made available funding for an Early Childhood Education and Care Worker Retention Payment (EWRP). The EWRP provides for a first pay increase above the employee's existing actual rate of pay equivalent to 10 per cent of the applicable award rate, payable to 30 November 2025 (and backdated to 2 December 2024 where eligible), and a second payment of an additional 5 per cent increase (making a total increase equivalent to 15 per cent above award rates) from 1 December 2025, payable to 30 November 2026.
[27] Clause 11 of the ECEC Agreement facilitates the on-payment of the EWRP to employees. Employers are positively required to pay the EWRP to their employees (clause 11.4) from the date the employer receives payment from the Commonwealth Government (clause 11.8). The EWRP forms part of the employee's ordinary hourly rate of pay and must be paid for all purposes under the ECEC Agreement (clause 11.9). Clauses 11.11 and 11.12 address the limited circumstances in which EWRP payments might cease.
[28] Whilst a clear objective of the ECEC Agreement is to facilitate access to the EWRP, the terms of the ECEC Agreement do not require employers to apply to the Commonwealth Government for a EWRP grant. Importantly, under the ECEC Agreement, the obligation to pay the EWRP to employees only arises if the employer receives EWRP payments from the Commonwealth.
[29] On 9 December 2024, we sent the bargaining representatives a list of concerns with respect to the ECEC Agreement's compliance with the better off overall test (BOOT) requirement in s 186(2)(d) of the FW Act. One of the concerns raised was that the rates of pay in the ECEC Agreement at test time were the same as those in the Awards and, therefore, it was not clear how employees could be considered better off than if they were paid under the Awards given that the ECEC Agreement did not actually require employers to apply for a EWRP grant.
[30] In response to these concerns, employers provided written undertakings to the Commission that they would each apply for the EWRP Grant by no later than 1 January 2025 if they had not already applied. We are satisfied that these written undertakings will ensure that employees are better off overall under the ECEC Agreement, particularly noting that EWRP payments will be backdated to 2 December 2024 once approved.
[32] The employers to whom the ECEC Agreement will apply have provided undertakings to address the other BOOT concerns which we identified. We are satisfied that the undertakings provided will not cause financial detriment to any employee covered by the ECEC Agreement and that the undertakings will not result in substantial changes to the agreement. No bargaining representative opposed the acceptance of the undertakings. Accordingly, we accept the undertakings. On the basis of the undertakings, we are satisfied that the ECEC Agreement passes the BOOT.
[33] Section 185(2)(a) requires that an application to approve an enterprise agreement must be accompanied by a signed copy of the agreement. Regulation 2.06A of the Fair Work Regulations 2009 (Cth) (FW Regulations) prescribes the requirements for the signing of an agreement and requires that a copy of the agreement is signed by the employer covered by the agreement and at least one representative of the employees covered by the agreement. The signed copy of the ECEC Agreement that accompanied the application for approval was signed, for each employer apart from G8, by the employer's bargaining representative. We were advised at the hearing that, in each case, the bargaining representative had been authorised by the employer to sign the ECEC Agreement for the employer and, accordingly, the agreement had been signed by the employer as required by reg 2.06A of the FW Regulations. We accept this position but, for the avoidance of any doubt, we waive any non-compliance with reg 2.06A of the FW Regulations under s 586(b) of the FW Act.
[34] We are satisfied that each of the requirements of ss 186, 187, 188 and 190 of the FW Act as are relevant to this application for approval have been met, including the specific requirement in s 187(3) relating to multi-employer bargaining.
[35] The ECEC Agreement does not contain a flexibility term that meets the requirements of s 203 of the FW Act. Pursuant to s 202(4) of the FW Act, the model flexibility term prescribed by the FW Regulations is taken to be a term of the agreement.
[36] The UWU, the AEU and the IEUA, being bargaining representatives for the ECEC Agreement, have given notice under s 183 that they want the agreement to cover them. In accordance with s 201(2) of the FW Act we note that the agreement covers the UWU, the AEU and the IEUA.
[37] The Agreement is approved and, in accordance with s 54 of the FW Act, will operate from 17 December 2024. The nominal expiry date of the ECEC Agreement is 30 November 2026.
Printed by authority of the Commonwealth Government Printer