Fair Work Act 2009

s.185 - Enterprise agreement

Application for approval of the Square Ceilings Pty Ltd Enterprise Agreement 2020.

[1] An application has been made for approval of an enterprise agreement known as the Square Ceilings Pty Ltd Enterprise Agreement 2020 (the Agreement) pursuant to s.185 of the Fair Work Act 2009 (the Act) by Square Ceilings Pty Ltd (the Applicant). The agreement is a single enterprise agreement.

[2] The matter was allocated to my Chambers on 24 July 2020.

[3] On 29 July 2020, I received a submission from Mr Peter Russell of the Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) seeking to be heard on the Application and advising of some concerns about matters relevant to the Agreement approval.

[4] On 30 July 2020, I conducted a telephone conference with the Applicant to seek clarification about aspects of the Agreement as detailed in a document provided with the notice of listing. These issues included the signature page requirements, better off overall test (BOOT) issues (including the loaded up rates and removal of entitlements to other payments, the maximum ordinary hours of work per day, compensation for shift work and the interaction of the daily fares allowance with Clause 19).

[5] Mr Tom Earls (of counsel) represented the Applicant with permission being granted pursuant to s.596(2)(a) of the Act, Mr Russell appeared on behalf of the CFMMEU.

[6] Mr Earls opposed the involvement of the CFMMEU as a party.

[7] The CFMMEU were not a bargaining agent in respect of the proposed Agreement, however I determined to receive a submission from Mr Russell, in accordance with s.590 of the Act, so as to inform myself of the relevant issues which may impact on the approval of the proposed Agreement

[8] Directions were issued which required the CFMMEU to provide written submissions detailing the basis for their opposition by 4 August 2020 and required the Applicant to respond to the matters raised by the Commission and the CFMMEU by 11 August 2020.

[9] I have received an email from Mr Russell dated 29 July 2020 and Submissions dated 4 August 2020. The concerns raised in these documents are summarised as follows:

• Whether the terms of the proposed Agreement were properly explained to the employees.

• Whether the proposed Agreement met the BOOT.

• That the hours of work provisions and the classification structure represented a significant departure from the Award.

• The impact of loaded rates of pay on National Employment Standards (NES) entitlements.

• Terms which allowed deductions from monies owed to employees.

[10] The Applicant filed a sworn statement of Mr Wenrong Zheng (Director) dated 11 August 2020 and written submissions.

[11] Mr Zheng's statement provided information about the structure of the Applicant's business, the usual hours of work and the two ballot processes undertaken before the proposed Agreement was made. The first ballot result was not relied upon owing to concerns about the failure to provide employees with a copy of a document explaining the terms of the Agreement. The second ballot process was preceded by the distribution of the proposed Agreement, and explanation of terms and a ballot letter. Mr Zheng attended meetings with employees at each of the three work sites, read through the Agreement and provided an explanation of the terms verbally and in writing. The meetings were conducted in Mandarin and English as six employees were not confident in English. Employees asked questions which included seeking core information about what was included in the loaded rates. Mr Zheng invited employees to contact him directly if there were additional questions. One person availed himself of this opportunity.

[12] The Applicant provided an undertaking which addressed a number of the issues raised and submitted that the Application with the undertaking met the requirements of the Act (including the BOOT test) and should be approved.

[13] At this point I was satisfied by the material before me, that all of the approval requirements with the exception of the BOOT test had been met.

[14] Having received the Applicant's submissions and proposed undertaking and the CFMMEU material, I sought that they be reviewed (in respect of the BOOT test) by the Commission's Agreements Team. The Agreements Team report concluded that the proposed Agreement together with the proposed undertakings did not meet the BOOT test. I have reviewed and accept the contents of the report.

[15] On 24 August 2020, I provide a copy of the report to Mr Earls and the CFMMEU and I received a report from the Agreements Team (including their modelling) and advised that it appears that the Agreement did not meet the BOOT test. The Applicant was invited to review their undertakings and respond by close of business 26 August 2020. The CFMMEU was invited to make any response by 9.00am 31 August 2020.

[16] The Applicant provided a revised draft undertaking and further written submissions.

[17] Mr Russell, despite being granted an extension of time, did not file any submissions within the time permitted. I refused to receive his late submission.

[18] In response to the provision of the report, the Applicant contended that the Commission's calculations were based on the assumption that all work was being performed in the commercial construction sector, that employees are engaged on a weekly hire basis and that Tradespersons would be entitled to receive the plasterers tool allowance. The Applicant was content with these assumptions.

[19] The Applicant contended that Ms Zheng's evidence was that from time to time the Applicant will work in the residential sector which would allow a margin of error in favour of the BOOT.

[20] The Applicant contended that I should reject the CFMMEU concerns about the classification structure.

[21] The Applicant provided submissions on the pattern of working hours which would likely be worked. In my view whether the pattern of working hours proposed to be worked fits within the normal pattern of hours or not is an irrelevancy. The intent of enterprise bargaining is to encourage innovation not to stymie it. The pattern of working hours is, however, clearly relevant to the BOOT test calculations.

[22] The Applicant contends that the base rates of pay are significantly above the Award (according to the Commission's calculation by at least 15.51%). The Applicant states this provides a further margin of error.

[23] The Applicant appears to accept that the 11.5 hour day modelling indicates a BOOT test failure but contends it is not an 'application of the BOOT' and would be offset by the working of more ordinary hours during the week. Despite this, the Applicant proposed to increase the rates of pay by $1.00 an hour to address this issue.

[24] The Commission also modelled the Construction, Forestry, Mining and Energy Union v Allstyle Concrete[1] 50 Hour week pattern which also indicated a BOOT failure. The Applicant contended that some caution be adopted in using that model. The Applicant contended that the additional $1.00 per hour ameliorated this concern.

[25] As to model 5 and 6, the Applicant contended that the Commission's modelling was incorrect as in respect of the meal allowance and crib times.

[26] It contended that under these patterns employees under the proposed Agreement were at least $206.18 per week better off.

[27] The Applicant also contended that the modelling did not account for Superannuation, and that the labourer classification had been based on the CW1(d) instead of the CW1(a)-(c).

[28] The Applicant contends that for every typical working week employees are substantially better off and that there is no evidentiary basis that for the odd week that they might not be better off would result in the BOOT test not being met.

[29] The Applicant relied on Mr McIntyre's 'evidence' to support its position as to the likely working hours.

[30] I am not persuaded that the classification structure and the access to higher duties provisions prevent the approval of the proposed Agreement.

[31] Having considered the information before me, the only issue which remains is whether the BOOT test has been satisfied.

[32] The section of the construction industry in which the Applicant will be engaged in over the year is difficult to predict and I note that that the majority of work will be performed in the construction sector. In my view, it is appropriate to model the impact of the Agreement presuming that all work is in the construction sector.

[33] Whilst the base rates of pay exceed the Award by some margin, the Agreement provides for lesser entitlements compared to the Award in the areas of:

• Compensation for loss of tools/clothes

• Multi-storey allowance

• First Aid Allowance

• Distant from work

• Redundancy entitlements (Redundancy is paid as per the NES rather than the industry specific redundancy scheme. This results in employees in years 1 to 3 receiving less than they would under the Award. However, after 4 years, employees are paid higher under the agreement. The Award definition of redundancy is broader than the NES definition at s.119 of the Act. Employees would receive redundancy in more circumstances under the Award than the NES)

• Superannuation is payable for both personal and sick leave and work related injuries or illness under clause 32.5 of the Award which the Agreement does not provide for

[34] Whilst the rates of pay in the Agreement as supplemented by the undertaking now passes the 11.5 hour days test and the 50 hour week (Allstyle test), I am not yet persuaded that the improved wages remove the adverse impact of the removal of the entitlements detailed above. I am not satisfied that the proposed Agreement passes the BOOT test. This concern could be addressed by additional undertakings including a Shop, Distributive and Allied Association v Beechworth Bakery Employee Co Pty Ltd T/A Beechworth Bakery[2] style undertaking.

[35] I propose to allow the Applicant until 4.00pm on 7 October 2020 to provide a revised undertaking, in the event that a revised undertaking is not provided, the application will be dismissed.

[1] [2018] FWCFB 3823

[2] [2017] FWCFB 1664

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