Fair Work (Transitional Provisions and Consequential Amendments) Act 2009

Sch. 7, Item 30(4) - Application to extend default period for enterprise agreements made during the bridging period

Quinn Transport Pty Ltd T/A Quinn Transport Pty Ltd

QUINN TRANSPORT PTY LTD TRANSPORT ENTERPRISE AGREEMENT 2009

Application to extend the default period for the Quinn Transport Pty Ltd Transport Enterprise Agreement 2009

[1] Quinn Transport Pty Ltd (the Applicant) has applied under item 30(4) of Schedule 7 to the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) (Transitional Act) to extend the default period for the Quinn Transport Pty Ltd Transport Agreement 2009 (Agreement, or the zombie agreement) for a period of four years.[1]

[2] The Agreement was made during the 'bridging period' as defined[2] in the Transitional Act and approved under the Fair Work Act 2009 (Cth) (FW Act) on 10 December 2009. Agreements of this kind are a species of what are commonly referred to as 'zombie agreements.

[3] The main aspects of the statutory framework for applications for the extension of zombie agreements were detailed in the Full Bench decision in Suncoast Scaffold Pty Ltd.[3] The Full Bench there dealt with an application to extend a 'WR Act agreement' under item 20A of Sch 3 to the Transitional Act. The terms of item 20A of Sch 3 are relevantly the same as item 30 of Sch 7. The Full Bench's analysis of those provisions applies equally to item 30 of Sch 7. It is not necessary to repeat that analysis here.

[4] The Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth) (SJBP Act) amended the Transitional Act to include item 30 in Sch 7. Item 30 provides for the sunsetting of remaining enterprise agreements made during the bridging period on 6 December 2023 unless extended by the Fair Work Commission (Commission). Subitem 30(6) provides that where an application is made under subitem 30(4) for the period to be extended, the Commission must extend the default period for a period of no more than four years if either:

(a) subitem (7) or (8) applies and it is otherwise appropriate in the circumstances to do

(b) it is reasonable in the circumstances to do so.

[5] Subitem (7) applies where the application is made at or after the notification time for a proposed enterprise agreement that will cover the employees and bargaining for the proposed enterprise agreement is occurring. No reliance was placed on this subsection by the Applicant.

[6] The present application was advanced on the basis that subitem (8) applies. This subitem applies if it is likely that as at the time the application is made, the relevant employees covered by the Agreement, viewed as a group, would be better off overall if the Agreement applied to the employees than if the relevant modern award referred to in subitem (9) applied. The relevant modern awards in this case are the Road Transport and Distribution Award 2020 (Transport Award) and the Road Transport (Long Distance Operations) Award 2020 (Long Distance Award).

[7] The Fair Work Commission's Agreements Analysis Team prepared a written assessment of the Agreement for the purpose of comparing the wages and entitlements in the Agreement with those contained in the Awards. A copy of this analysis was provided to the Applicant who was given an opportunity to make further comments or submissions about the analysis.

[8] Clause 9 of the Agreement provides for the rates of pay payable under the Agreement. Clause 9.1 says 'The Base Weekly Agreement rates of pay for each classification level and the associated Base Hourly Rates for Local Work and Long Distance are as follows:' It then includes a table of rates for 'Base Weekly (and hourly) Agreement Rates' for classification levels 1 to 8 and 'Agreement Minimum Flat Hourly Rates' for classification levels 6 to 8. The former rates reflect the base award rates at the time the Agreement was approved.

[9] In relation to the various rates in clause 9.1, clause 6.2 of the Agreement provides as follows:

6.2 If the Base Weekly and Base Hourly rates of pay set out in the table in clause 9.1 are adjusted from time to time through Federal Minimum Wage Increase such that they exceed the Flat rates payable under this Agreement, then the rates payable under this Agreement shall be increased to match these rates.

[10] While the wording of this clause is not entirely clear, for the purpose of the present exercise we have assumed that the effect of this clause is to adjust the base weekly and hourly rates in accordance with movements in award rates from time to time. It also appears that the effect of the clause is to ensure that the flat rates referred to in the table of clause 9.1 are adjusted commensurate with those increases.

[11] Notwithstanding the reference to base weekly and base hourly rates, the amounts that are required to be paid under the Agreement are the Agreement Minimum Flat Hourly Rates referred to in the right-hand column of the table in clause 9.1 which, as noted above, apply to classification levels 6 to 8 only. This is because of the operation of clauses 9.2.3 to 9.2.6 which provide as follows:

9.2.3 To facilitate the calculation of wages, both for the employees and the employer, the employees will be paid Flat Hourly Rates of pay that are based upon 38 Ordinary Hours per week but which take into account the average hours of work which may be involved throughout the year and the balance of Local and Long Distance work involved.

9.2.4. The resultant minimum Flat Hourly rates of pay for each grade shall be as set out in the table in clause 9.1. These rates are based upon the employees working an overall average of 40% of their time on Local Work and 60% of their time on Long Distance Work.

9.2.5. The Long Distance portion of the Flat Hourly Rates set out in the table in clause 9.1 is based on an average ratio of driving, loading and waiting hours of 70:20:10.

9.2.6. The Flat Hourly rates set out in the table in clause 9.1 are based on 38 Ordinary hours per week and include payment for overtime and the long distance Disability Allowance, based upon the work patterns set out in clauses 9.2.4 and 9.2.5.

[12] Again, although it is not clear, on the face of the Agreement at least, exactly how these Flat Hourly rates are arrived at, the Agreements Team analysis took into account the terms of an undertaking provided by the Applicant at the time at which the Agreement was approved. That undertaking refers to the 'Local Flat Hourly rates' and the 'Long Distance Trips rates'. Local Flat Hourly rates are said to be based on the current award base hourly rates and are inclusive of all ordinary time, time and one half and double time hours worked. The Long Distance Trips rates are also said to be based on current award base rates and to be inclusive of the long distance driver's 30% disability allowance and a 20% overtime component.

[13] In our view the terms of the Agreement and the undertaking do not provide sufficient clarity to determine how the rates of pay that are payable under the Agreement are calculated or how they are to be adjusted from time to time. However, the undertaking indicates that the figures in the Agreement were supported by a spreadsheet of calculations that was provided with the undertaking but not published with the approval decision. Those calculations set out the means by which the three flat hourly rates for classification levels 6 to 8 in clause 9.1 have been arrived at. It is sufficient for present purposes to note that those calculations take the award base rate as the starting point, assume an employee works a 55-hour week and apply a ratio applicable to different duties associated with distance work to arrive at a long-distance flat rate figure. That figure is then apportioned as against the flat hourly rate figure for local work, again based on a 55-hour working week, to arrive at the Agreement Minimum Flat Hourly rate referred to in clause 9.1. It is also relevant to note that clauses 9.2.6, 10.3 and 14.1 of the Agreement expressly provide that those rates are taken to be inclusive of payment for overtime, long distance disability allowance, meal allowance and shift penalties.

[14] The Commission's analysis proceeded on the basis of the formula provided for in these calculations and taking into account the movements in award rates that have occurred since the Agreement was approved, to determine the rates that are presently payable under the Agreement. This approach to the rates payable according to the strict terms of the Agreement was not disputed by the Applicant although the Applicant pointed out that the rates that were actually being paid exceeded the Commission's calculation and indicated that drivers receive this same hourly rate irrespective of whether they drive a grade 6, 7 or 8 heavy vehicle.

[15] The Applicant contended that in all cases drivers in the Grades 6 to 8 classifications were better off under the terms of the Agreement irrespective of whether they worked a 38-hour week or a 55-hour week. However, the Applicant's calculations were based on a rate of pay of $36 per hour, that is, the amount actually paid, as opposed to the amount provided for by the Agreement.

[16] The Commission's modelling showed that depending on the hours worked, the total amounts payable under the Agreement for classification levels 6 to 8 were in some cases slightly higher under the Agreement than would be the case under the Awards and in other cases they were slightly below the Award rates. For each of the three classification levels the Agreement rate was slightly higher in circumstances where an ordinary 38-hour week was worked but, in each case, where a 55-hour week is worked, employees would receive less according to the terms of the Agreement than they would under the terms of the relevant modern awards.

[17] The Commission's assessment has also taken into account the operation of Clause 2.1 of the Agreement. Clause 2.1 of the Agreement provides:

This Agreement is based on the Transport Workers Award 1998 and the Transport Workers (Long Distance Drivers) Award 2000, the terms of which form part of this agreement.

2.1. If an employee covered by this Agreement becomes entitled to an Award provision, such as a contingent benefit, and the provision is not mentioned in this Agreement, then the Employee shall be entitled to the provisions and benefits as per the relevant Award.

[18] Again, the wording is not entirely clear, and, because of its vintage, the clause makes reference to superseded awards. Nonetheless, for the purpose of the present analysis it was assumed that where the Agreement is silent, the provisions of one or other of the relevant modern awards will apply.

[19] Clause 14.1 of the Agreement provides that hours of work are an average of 38 ordinary hours per week which are averaged over a 12-month period plus reasonable additional hours which includes payment for overtime and shift penalties. All hours which are permitted by relevant laws applying to the industry are not to be considered unreasonable. Clause 13 of both awards provide that ordinary hours are 38 ordinary hours averaged over a period of not more than 28 days. i.e. 152 hours averaged over 4 weeks. The Applicant acknowledged that the Agreement provisions in this respect reflected the position at the time the Agreement was made in that the predecessor award to the Long-Distance Award did not contain the 38 ordinary hours provision that the latter award now contains.

[20] In Suncoast Scaffolding the Full Bench observed that the application of the better off overall test in Item 9 of Item 20A in Schedule 3 required a broad evaluative judgment based upon an overall comparison of the terms of the transitional instrument and the relevant award(s) in their application to the cohort of award covered employees.[4] We apply the same approach here.

[21] Given the above analysis, we are not satisfied that the award covered employees, viewed as a group, would be likely to be better off overall if the Agreement continued to apply to them rather than if the relevant modern awards applied. We note that the Commission's calculations demonstrate that for those employees to whom the flat hourly rate applies, the application of the Agreement in circumstances where they are working longer hours, produces a lower total payment than is provided for in the relevant awards. Having regard to the nature of the industry, including the requirement for long distance work, which is a feature of the Applicant's enterprise, we regard the monetary disadvantage associated with extended hours to be an important consideration. We are conscious that the Applicant has indicated that as a matter of practice, the rates that are being paid exceed those provided for in the Agreement however the relevant comparison required is between what is provided for by the terms of the Agreement compared to the relevant award/s, not the rates that the employer might determine to pay at any particular point in time.[5]

[22] Given that we are not satisfied that it is likely that the employees would be better off if the Agreement continued to apply it is not strictly necessary to consider whether it is also otherwise appropriate in the circumstances to extend the default period. However, we observe that even had we concluded that the employees would be better off under that Agreement, we do not consider it would be appropriate to extend the life of this Agreement.

[23] Various Full Bench decisions[6] have now pointed to the default position of the statutory scheme to automatically terminate transitional instruments on 6 December 2023 as suggesting a policy preference for employees covered by transitional instruments to be regulated by contemporary instruments made under the FW Act. The present application highlights the desirability of ensuring that agreements are in clear terms and the rates and conditions that they provide for are readily ascertainable by the employers and employees who are covered by them. In this case the Agreement was made almost 14 years ago. It lacks clarity. In key clauses it references awards that have long since been superseded. It expresses entitlements in dollar amounts that have long since been overtaken as a consequence of award adjustments. Determining the rates of pay that are actually payable now under the Agreement is not a straightforward exercise and has required consideration of federal award increases over an extended period, undertakings and supporting calculations given at the time of approval. The method of determining the rates payable do not appear on the face of the Agreement itself or the undertaking that accompanied it at the time of approval. The calculations that underpin that method may not be readily available. While the Applicant may be entirely familiar with how the Agreement is to apply, it is difficult to see how the same could be said for employees, particularly those who might be new to the business. These are considerations which weigh against a conclusion that it is appropriate to extend the life of this agreement.

[24] We note also that there was no evidence as to the views of the Applicant's employees to suggest that they were supportive of its continued operation. The Applicant did not contend that the continued operation of the Agreement was critical to the ongoing operation of the business. In fact, it appeared that the Applicant was in some instances paying above what the Agreement required. In all the circumstances we consider that the appropriate course would be for the parties to negotiate a new instrument that is in clear terms and reflects the contemporary reality of the enterprise.

[25] For the above reasons, the application is dismissed.

[1] Correspondence from the Applicant to the Commission dated 19 July 2023.

[3] [2023] FWCFB 105 at [3] to [18].

[4] [2023] FWCFB 105 at [15]

[5] All Seasons Carpet Cleaning Collective Agreement [2023] FWCFB 158, [23]; Drilled Foundations Contracting Pty Ltd and CFMEU Collective Union Agreement 2007 and the Piled Foundations Contracting Pty Ltd and CFMEU Collective Union Agreement 2007 [2023] FWCA 3011, [40]; Payfam Enterprise Pty Ltd T/A Ravenshoe IGA Everyday [2023] FWCFB 173, [45]

[6] See for example One HPA Certified Agreement 2004-2007, the EDS People Agreement 2002 and the Alcatel Lucent Employment Partnership Agreement 2009 [2023] FWCFB 137, [32]

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