Fair Work Act 2009

s.185 - Enterprise agreement

Application for approval of the Fantastic Furniture Enterprise Agreement 2019.

[1] An application has been made for approval of the Fantastic Furniture Enterprise Agreement 2019 (the Agreement). The application was made pursuant to section 185 of the Fair Work Act 2009 (the Act). It has been made by Fantastic Furniture Pty Ltd (the Applicant). The Agreement is a single enterprise agreement.

[2] A notice of employee representational rights was provided to employees on 18 June 2019 and the notice complied with the regulations. The Applicant states that employees were provided with access to the Agreement and information about the effect of the terms of the Agreement on 22 August 2019.

[3] The Applicant states that employees were notified of the time, place and method of voting via emails and the Applicant's intranet on 22 August 2019 and that voting occurred between 30 August and 2 September 2019. A majority of those who voted approved the Agreement.[1]

[4] The Applicant filed a statutory declaration in support of the Agreement. The statutory declaration noted that the relevant awards for the purpose of the better off overall test (BOOT) were the General Retail Industry Award 2010[2] (the Retail Award) and the Storage Services and Wholesale Award 2010[3] (the Storage Award).

• [5] The statutory declaration noted that some provisions in the Agreement were more beneficial than the Award or were not conferred by the Award. Less beneficial terms were also identified.

[6] The Shop, Distributive and Allied Employees' Association (the SDA) filed a Form F18 statutory declaration on the 18 September 2019 and in doing so advised that it did not support approval of the Agreement. It raised concerns in relation to the Agreement, primarily being that of whether the Agreement met the BOOT and whether the terms of the Agreement were properly explained to employees as required by s. 180(5) of the Act.

[7] In reviewing the Agreement for approval, the Fair Work Commission (the Commission) identified a number of concerns in relation to the Agreement and supporting documentation. These included pre-approval requirements, National Employment Standards (NES) compliance and BOOT assessment considerations. The Commission wrote to the Applicant on 2 October 2019 and identified a number of issues requiring a response. In doing so the Commission also highlighted the SDA's Form F18 and the concerns that had been raised by them and sought a response from the Applicant in relation to those concerns.

[8] What followed was an exchange of various correspondence between the Commission, the Applicant and the SDA that culminated in correspondence from the Applicant to the Commission on 8 November 2019 to which the Applicant attached a set of proposed undertakings that sought to address the concerns raised by the Commission and SDA.

[9] The SDA subsequently pressed a number of its outstanding concerns and the matter was listed for a determinative conference that was held on 13 January 2020. The Applicant was represented at the conference by Mr M Follett of Counsel who was granted permission to appear pursuant to s. 596 of the Act while the SDA were represented by Mr H May and Mr M Galbraith. Following the conference, the Commission forwarded a document to the parties on 16 January 2020 that summarised all matters that had been raised by both the Commission and the SDA. The document included the Commission's preliminary view on both those matters it considered had been resolved as well as outstanding concerns. The Applicant was invited to provide further submissions and/or undertakings in relation to the outstanding matters.

[10] In response to the Commission's correspondence of 16 January 2020, the Applicant made further submissions and provided a revised set of undertakings to address the Commission's remaining BOOT concerns. The SDA subsequently wrote to the Commission on 28 January 2020 and advised that it continued to oppose approval of the Agreement on the grounds that the Commission could not be satisfied that the Agreement passed the BOOT. Determination of the matter is now required having regard to the submissions and material filed by the parties and the proposed set of undertakings provided by the Applicant.

[11] Before turning to the outstanding concerns including the matters that the SDA continues to press in its objection to approval of the Agreement, it is useful to briefly summarise some features of the Agreement and identify the undertakings that the Applicant has proposed.

[12] The Agreement, if approved, would cover defined classifications within the Applicant's retail and warehouse operations. The Agreement would replace the Fantastic Furniture Pty Ltd Collective Agreement 2009[4] and entirely displaces the Retail Award and Storage Award. Importantly for the purpose of BOOT consideration, the base rates of pay for a number of on-site retail classifications are equivalent to the relevant Retail Award base rates of pay. The wage rate margin between the Agreement and relevant award base rates range between 0-8% and penalty rate provisions under the Agreement are largely aligned with the relevant award provisions.

[13] In displacing the Retail Award and Storage Awards, terms and conditions of employment within the Agreement reflect some of the underpinning award conditions, have some benefits that are more beneficial and are silent or less beneficial than a significant number of relevant award conditions. To address those identified deficiencies which prompted concerns from both the Commission and SDA, the Applicant proposed a set of undertakings to address the following concerns;

• Undertaking 1 addresses casual employees not being entitled to two days off per week, which is less beneficial than the Retail Award.

• Undertaking 2 addresses the minimum engagement for part-time and casual employees of 3 hours vs 4 hours under the Storage Award.

• Undertaking 3 addresses the concern that employees may be required to take a meal break within 1 hour of commencing or finishing work, which is less beneficial than the Retail Award.

• Undertaking 4 addresses the concern that the minimum overtime payment for off-site employees is 3 hours on a Saturday vs 4 hours under the Storage Award.

• Undertaking 5 addresses the overtime worked credit to annual leave on an hour for hour worked basis rather than at the equivalent OT rate.

• Undertaking 6 addresses the onsite employee recall for overtime minimum payment provision, which is less beneficial than the Retail Award.

• Undertaking 7 addresses the required return of purchased property without compensation.

• Undertaking 8 addresses the definition of Shiftworker for the purpose of the NES.

• Undertaking 9 addresses the concern that there is no requirement for parental permission for annual leave (A/L) cashed out by employees under 18, which is contrary to the Retail Award.

• Undertaking 10 addresses the direction to take annual leave not being subject to a minimum of 8 weeks' notice, which is less beneficial than the Storage Award.

• Undertaking 11 addresses the inability of an employee to request A/L in circumstances of having an excessive A/L balance, which is less beneficial than the Retail Award.

• Undertaking 12 addresses the absence of a provision that would allow A/L to be paid in advance of commencement of annual leave, which is less beneficial than the Storage Award.

• Undertaking 13 addresses the concern that withholding of wages is not limited to one week's wages per the Retail Award nor is there an age restriction on withholding of wages.

• Undertaking 14 addresses the inability of workers under notice of redundancy to leave during such notice and still be entitled to redundancy, which is less beneficial than the Retail Award.

• Undertaking 15 addresses the absence of accident make-up pay provisions applying to off-site employees, which is less beneficial than the Storage Award.

• Undertaking 16 addresses payment for all time additionally spent travelling away from an employee's normal workplace.

• Undertaking 17 addresses the relocation allowance which is to be paid according to the company policy which is not incorporated into the Agreement.

[14] While it accepts the majority of undertakings that have been proposed, the SDA continues to object to approval of the Agreement on the grounds that the Agreement fails to meet the BOOT. Those continuing objections relate to;

• The penalty payable under the Agreement in circumstances where an employee is required to return to work without the requisite rest break is less beneficial than the Retail Award.

• The Agreement fails to provide for a 19-day month in respect of retail establishments that have 15 or more employees.

• Undertaking 19 does not provide the same protections as under the Retail Award in respect of part-time employees agreeing to alter their hours of work such that they may agree to not have 2 consecutive days off work per week or 3 consecutive days off per fortnight.

• The Agreement does not prevent retail employees being asked to undertake toilet cleaning as part of their incidental cleaning duties, contrary to the Retail Award.

• The laundry allowance under the Agreement is less beneficial than the Retail Award in respect of part-time and casual employees who work less than a full shift.

[15] Section 186(1) of the Act establishes a "basic rule" that where an application for approval of an enterprise agreement is made under s.185 (which prescribes the time in which such an application must be made and its content), the Commission must approve the agreement if the requirements in ss.186 and 187 of the Act are met. Sections 186 and 187 set out a range of approval requirements. Section 186(2) of the Act sets out approval requirements in relation to the safety net, and relevantly provides as follows:

'186 When the FWC must approve an enterprise agreement - general requirements

(a) if the agreement is not a greenfields agreement - the agreement has been genuinely agreed to by the employees covered by the agreement; and

(b) if the agreement is a multi-enterprise agreement:

(i) the agreement has been genuinely agreed to by each employer covered by the agreement; and

(ii) no person coerced, or threatened to coerce, any of the employers to make the agreement; and

(c) the terms of the agreement do not contravene section 55 (which deals with the interaction between the National Employment Standards and enterprise agreements etc.); and

(d) the agreement passes the better off overall test.'

[16] Section 193 prescribes what is necessary to pass the better off overall test. It relevantly provides:

When a non-greenfields agreement passes the better off overall test

(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:

(a) is covered by the agreement; and

(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:

(a) would be covered by the agreement; and

• (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.'

[17] In assessing whether the Agreement is capable of approval I turn firstly to consider the outstanding matters raised by the SDA.

[18] The Agreement provides at clause 5.8 that where an employee is recalled to work without having had 10 consecutive hours of work, the employee is entitled to receive "200% of the Base Rate of Pay" for work performed until such time as they do have the requisite 10 hour rest period. That wording is to be contrasted with clause 31.2 of the Retail Award which relevantly provides for a penalty of "double the rate" the employee would be entitled to until released from duty.

[19] The SDA submit that the terms in the Retail Award are clear and unequivocal. The effect of the SDA construction is that if an employee rostered to work ordinary hours of work that attracted a shift or weekend penalty were recalled to work such hours without having had the requisite rest period, than the penalty of double time would be applied to the total 'rate' inclusive of the shift or weekend penalty for such ordinary hours until released. Unsurprisingly, the Applicant rejects the SDA's construction and submits that a payment of a penalty on a penalty is not provided for in the Retail Award.

[20] What must be firstly said is that despite the SDA's submission I do not regard the terms of the Retail Award as unequivocal. While, the award term refers to the 'rate' the employee would be entitled to until released from duty, it (the 'rate') is not defined. Furthermore, the SDA did not advance a detailed case for their contended construction of the clause. It is also relevant to note that the ambiguity of the clause was explicitly noted by His Honour Justice Ross in proceedings relating to the plain language re-drafting (PLED) of the Retail Award as part of the 4 yearly review of modern awards in a decision dated 1 October 2018.[5] The parties to those proceedings, including the SDA, apparently accepted that a level of ambiguity would continue to exist in the provisions of the PLED.[6]

[21] Absent a compelling case by the SDA as to the proper construction of clause 31.2 of the Retail Award, I am not persuaded that the terms of the Agreement are less beneficial. The provision of the Agreement (clause 5.8) is therefore a neutral consideration for the purpose of the BOOT assessment.

[22] Clause 28.5 of the Retail Award provides for the ordinary hours of work of a full-time employee to be worked as a default on a 19-day month basis in retail establishments that employ 15 or more employees on a regular basis. While the Applicant's establishments overwhelmingly employ less than 15 employees per establishment it is conceded by the Applicant that some of its establishments may employ 15 or more employees from time to time. Notwithstanding that, the Agreement provides for ordinary hours of work of full-time employees to be worked on a 20-day month basis across all of the Applicant's establishments. The SDA contend this is less beneficial than the Award provision.

[23] While rejecting that the difference was less beneficial, or if it was, it was a non-financial detriment, the Applicant proposed an undertaking in the following terms;

"A full-time Onsite Retail Employee who works in a retail store which has employed 15 or more employees in a particular week in question and in each of the previous three weeks, will be paid an allowance of $20 for the particular week in question (gross)."

[24] The SDA reject that the payment of the $20 allowance compensates for the absence of a 19-day month. They contend that the financial detriment arises from the absence of penalty payments that would otherwise apply under the Award in circumstances where an employee, who for example, was working on a 19-day month on a Monday-Friday basis, was required to work on the 20th day (e.g. 4th Friday in the 4-week period). In that circumstance the employee would under the Retail Award be entitled to overtime penalty payments for work on such day. The Agreement rates do not compensate for such overtime penalty payments according to the SDA.

[25] The submission advanced by the SDA is with respect misconceived. It seems to proceed on the basis that in respect of establishments with 15 or more employees, any hours worked on the 20th day of a 4-week period attract overtime payments. That they attract overtime payments is not because it is the 20th day of the 4-week period, but rather because any hours worked on such day are outside the 38 ordinary hours of work of the relevant employees. That is no different to the arrangements that apply under the Agreement, that is, any work performed outside of the 38 ordinary hours of work will attract overtime payments. The fact that the ordinary hours may be worked over 20 days under the Agreement as opposed to 19 days does not alter the entitlement to penalty payments for work beyond 38 hours.

[26] It necessarily follows from the above that I do not accept the SDA's submission as to their being a financial detriment. Nevertheless, the Applicant has proposed an additional $20 allowance to compensate employees for the non-financial detriment of not receiving a 19-day month in circumstances where there are periods during which 15 or more employees may work in a particular establishment. I accept in the circumstances of this case that the proposed allowance acts to offset the non-financial detriment. My view on this is reinforced by the fact that it is open to an employee entitled to a 19-day month under clause 28.5 of the Retail Award to agree to work ordinary hours on other than a 19-day month basis, and no penalty payment or additional allowance is prescribed to apply in such circumstances.

[27] While it is inherently difficult to assess the weight to be given to a non-financial detriment when assessing the BOOT, I am satisfied in the circumstances that the proposed undertaking offsets any detriment and as a consequence this item is a neutral consideration for the purpose of the BOOT.

[28] In respect of days off per week for part-time employees, clause 5.6(c) of the Agreement provides for 2 days off per week unless otherwise agreed in writing. By contrast clause 28.11 of the Retail Award provides for 'two consecutive days off each week or three consecutive days in a two-week period'. While an employee can request and agree in writing under the Retail Award to different arrangements, such a request cannot be made a condition of employment.

[29] To address the remaining concern held by the Commission that under the Agreement an offer of part-time employment could be made on a condition of the employee not receiving 2 consecutive days off per week or 3 consecutive days per fortnight, the Applicant proposed the following undertaking;

"Notwithstanding anything in clauses 2.1, 2.2 and 5.6(c) of the Agreement, Fantastic will not make an offer of employment for a part-time Onsite Retail Employee conditional upon that employee agreeing to a pattern of work under clause 2.1(b) which does not include two consecutive days off each week. However, a part time Onsite Retail Employee may agree to not have two consecutive days off each week if they so choose."

[30] The SDA continue to press an objection on the basis that under the Retail Award, any change in the hours of work of a part-time employee in respect of consecutive days off must be recorded in writing and the part-time employee can terminate such agreement with four weeks' notice, whereas no such protection is available under the Agreement.

[31] I disagree with the SDA's contention that the Retail Award protection of agreement in writing to any change in the hours of work as it affects days off is not found in the Agreement. Clause 2.3 of the Agreement makes clear that changes to the hours of work of a part-time employee, including the days of the week on which those hours are worked, may be changed anytime 'in writing (including by electronic means)'. I do however accept that the ability of an employee under the Retail Award to withdraw their agreement to not have 2 consecutive days off is not mirrored in the Agreement or the proposed undertaking. To that extent I regard the Agreement as a detriment relative to the Retail Award for the purposes of the BOOT assessment.

[32] The SDA refer to Schedule B - Classifications of the Retail Award and specifically B.1.2 which states that retail employees may be required to undertake incidental cleaning but then goes on to state 'The cleaning of toilets is not incidental cleaning except in the case of a take away food establishment'. By comparison the Agreement does not exclude 'toilet cleaning' from incidental cleaning that retail employees may be required to undertake.

[33] The Applicant acknowledges that such duties are not excluded under the Agreement but that nothing in the Retail Award prohibits toilet cleaning. Further, the pay rates in the Agreement are in excess of the Cleaning Services Award 2010 and equivalent to rates in the Fast Food Award 2010 for such work. It also submits that for stores with public toilets, cleaners are to be engaged.

[34] Contrary to the SDA submissions, I do not accept that the relevant provision in the Retail Award acts to prevent the Applicant from requiring its employees to undertake particular duties under the terms of an enterprise agreement, so long as those duties are within the skills, competence and training of the employee and of course subject to any relevant regulatory requirements. In the present case, the issue of concern is that of the cleaning of staff toilets. While that work may be regarded as distasteful by some staff, I don't believe it can be seriously argued that such work would be beyond the skills, competence and training of employees. The fact that it may not be work that is covered by a classification under the Retail Award does not mean that it is not work that may be required to be performed under the terms of the Agreement.

[35] I note that the Cleaning Services Award 2010[7] (the Cleaning Award) provides for toilet cleaning at the classification of Cleaning Services Employee Level One which attracts a minimum hourly rate of pay of $20.82. In circumstances where such employees are engaged for the major portion of their shift on cleaning toilets, they would receive an additional allowance of 1.766% of the Level 1 base rate of pay, bringing their hourly rate of pay to $21.18 per hour. The minimum rate of pay under the Agreement for a Level 1 Onsite Retail Team Member is $21.41. Even allowing for the unlikely scenario of an employee at that classification under the Agreement being required to clean toilets for the major portion of their shift, they would still receive a higher rate of pay under the Agreement than under the Cleaning Award. In these circumstances I do not accept that there is a financial detriment. To the extent that there may be a non-financial detriment relative to the Retail Award I give it limited weight in the assessment of the BOOT.

[36] The Agreement provides at Schedule D for a laundry allowance of $0.17 for each ordinary hour of work. This equates to a weekly allowance of $6.46 based on a 38-hour week. There is no minimum number of hours on which payment is based. By comparison, the Retail Award provides for a weekly allowance of $6.25 for a full-time employee and a minimum payment of $1.25 per shift for part-time or casual employee.

[37] While the SDA accepts that the Agreement provides for a higher laundry allowance than the Retail Award in the case of full-time employees, they contend it provides for a lesser entitlement in circumstances where a part-time or casual employee works less than a full shift. That is because the Retail Award provides for a minimum shift payment of $1.25 per shift whereas the Agreement calculates the entitlement on the basis of $0.17 per ordinary hour worked.

[38] I agree with the SDA submission. In any circumstance where a casual or part-time employee works a shorter shift than 7.4 hours per day, that employee will receive a lesser laundry allowance under the Agreement than they would receive under the Retail Award. In these circumstances the provision is a detriment relative to the Award in respect of those casual and part-time employees that work shifts of less than 7.4 hours in length. This weighs against a finding that the Agreement satisfies the BOOT.

[39] It will be seen from the statutory provisions provided above that an enterprise agreement will be found to have passed the BOOT if the Commission is satisfied, that at the test time, each award covered employee and each prospective award covered employee employed under the Agreement would be better off overall if the Agreement applied to the employee rather than if the award applied to the employee.

[40] The application of the BOOT is not applied as a line by line test. Rather, it is a global consideration of the provisions in the Agreement compared to the award/s, taking into account those provisions that are less beneficial and weighing them against those provisions that are more beneficial.

[41] While the Applicant has provided undertakings to address some concerns raised by the Commission and the SDA, there are some remaining concerns as outlined above. As I have noted at [12], the Agreement provides for rates of pay in respect of particular on-site retail classifications that are equivalent to the Award. Given the level of the wage rates it is necessary to carefully weigh those detrimental provisions that I have identified above with the more beneficial provisions that may be provided by the Agreement. The Applicant has contended that there are a range of conditions under the Agreement that are more beneficial or not conferred by the relevant awards that weigh in favour of a finding that the Agreement meets the BOOT. Those conditions and my assessment as to whether they are a benefit are as follows;

• (i) Clause 3 deals with Individual Flexibility Agreement - it allows for a broader range of matters to be agreed than under the awards. I regard this provision as neutral for the purpose of the BOOT.

• (ii) Clause 5.3 provides for 14 days' notice of rosters compared to 7 days under the Retail Award. I regard this as a non-financial benefit

• (iii) Clause 5.5 requires the Applicant to have regard to family and study commitments when rostering employees. I regard this as a non-financial benefit.

• (iv) Clause 6 enables shift swaps between employees. I regard this as a non-financial benefit.

• (v) Clause 9.3 provides for higher rates of pay for employees under 19 years of age then the Retail Award. I regard this as a contingent financial benefit and has limited application given the Applicant employs few employees under 19 years of age.

• (vi) Clause 10.2 outlines the notional uniform allowance which allows purchase of employee selected items rather than nominated items. I regard this as a marginal financial benefit.

• (vii) Schedule D provides a higher laundry allowance than under the Retail Award. I regard this as a marginal financial benefit in respect of full-time employees but a marginal financial detriment for casual and part-time employees that work less than 7.4-hour shifts.

• (viii) Clause 12 provides for payment of the higher duties allowance for a whole day in broader circumstances than the Retail Award. I regard this as a marginal contingent financial benefit.

• (ix) Clause 14.2 provides superannuation payments in broader range of circumstances and largely applies to junior employees. I regard this as a contingent financial benefit.

• (x) Clause 16.4 allows an employee to access personal/carers leave in advance with agreement of the Applicant. I regard this as a contingent financial benefit.

• (xi) Clause 18 provides for compassionate leave in excess of the Retail Award. I regard this as a contingent financial benefit.

• (xii) Clause 19.1 allows access to personal/carers leave in specified circumstances without providing evidence. I regard this as a contingent financial benefit.

• (xiii) Clause 20 provides for enhanced parental leave benefits in terms of superannuation. I regard this as a contingent financial benefit.

• (xiv) Clause 22 provides for access to paid community service leave. I regard this as a contingent financial benefit.

• (xv) Clause 27 provides for access to paid domestic violence leave. I regard this as a contingent financial benefit.

• (xvi) Clause 28 provides for unpaid leave of absence. I regard this as a contingent non-financial benefit.

• (xvii) Clause 30.1 provides for enhanced redundancy benefits. I regard this as a contingent financial benefit.

• (xviii) Schedule D provides a higher first aid allowance. I regard this as a contingent financial benefit.

[42] Balanced against the above-referred benefits which are largely either non-financial or contingent financial benefits, I have also identified some residual detriments, those being the laundry allowance for part-time and causal employees and the absence of the award protection for part-time employees to withdraw from an agreement in respect of their days off per week.

[43] While the wage rates of some on-site retail classifications are equivalent to the Award, I am satisfied that that the marginal financial benefits of the uniform and laundry allowances and the non-financial benefits under the Agreement viewed in conjunction with the undertakings that have been proposed would ensure that full-time employees and prospective full-time employees would be better off overall under the Agreement than if the relevant awards applied.

[44] I am however not satisfied that part-time and casual employees would be better off overall. This is because the marginal financial detriment that arises from the structure of the laundry allowance is not offset by other non-contingent financial benefits under the Agreement. Further, the absence of protection of a part-time employee's right to withdraw from an agreement in relation to the pattern of days off each week or fortnight weighs against a finding that part-time employees would be better off overall under the Agreement. I note that both of these concerns may be addressed by the provision of revised undertakings.

[45] I am satisfied on a preliminary basis that, save for the specific BOOT concerns I have identified in respect of part-time and casual staff, the other statutory requirements necessary for approval of the Agreement are met and that the Agreement is capable of approval. Furthermore, the undertakings proffered by the Applicant will not cause financial detriment nor result in substantial changes to the Agreement.

[46] The Applicant will be afforded an opportunity to address the part-time and casual employment concerns that I have identified above and is invited to provide undertakings on or by 4.00pm on Thursday 6 February 2020 following which the SDA will be provided a further 2 days within which to comment. Should the Applicant decline to provide revised undertakings to address the remaining concerns I will proceed to determine the matter on the material before me.

[1] Section 180 of the Act

[2] MA000004

[3] MA000084

[5] [2018] FWC 6075

[7] MA000022

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