VIP Plastic Packaging Pty Ltd [2023] FWCFB 161 | Case summary

[1] An application has been made for approval of an enterprise agreement known as the VIP Packaging Altona North Enterprise Agreement 2023 (Agreement). The application was made pursuant to s 185 of the Fair Work Act 2009 (FW Act) by VIP Plastic Packaging Pty Ltd (VIP). The Agreement is a single enterprise agreement.

[2] A notice of employee representational rights was provided to employees on 3 April 2023 and the notice complied with the Fair Work Regulations 2009 (Cth). Employees were provided with notice of the time and place and method of voting by 7 August 2023 and were provided with access to the proposed Agreement and information about the effects of the terms of the Agreement in the period from 7 to 16 August 2023. Voting occurred on 16 August 2023 and a majority of those who voted approved the Agreement.

[3] VIP filed a Form F17A declaration in support of the Agreement. The declaration, which was made by its Human Resources Manager, Mr Dean Bacarella, noted that the relevant award for the purpose of the better off overall test (BOOT) was the Manufacturing and Associated Industries and Occupations Award 2020[1] (Award).

[4] The application for approval of the Agreement was initially allocated to the chambers of Deputy President Masson on 28 August 2023. In reviewing the application for approval of the Agreement, the Deputy President identified several concerns in relation to the Agreement and supporting documentation. The Deputy President's chambers sent correspondence to VIP on 29 August 2023 setting out the issues requiring a response, including the following:

(1) The Agreement did not include classifications or rates of pay, such classifications and rates of pay being included in a separate document titled 'VIP Packaging Altona North Enterprise Agreement 2023' ('Wage Schedule'). The Wage Schedule document was referenced in clause 9 of the Agreement but was not incorporated and therefore did not form part of the Agreement. An undertaking containing the specific rates of pay was sought.

(2) The Agreement failed to identify the relevant rates of pay for apprentices or trainees in circumstances where the Agreement contemplated those types of employment. Clarification on what apprentices and trainees were to be paid was sought.

(3) The calculation of casual loadings under clause 29 of the Agreement referenced classifications that were not contained in the Agreement. Clarification on how casual rates were to be calculated in the absence of classifications in the Agreement was sought.

[5] VIP responded to the initial concerns correspondence sent by the Deputy President on 4 September 2023. In doing so it proffered undertakings that satisfactorily addressed the Deputy President's concerns in relation to the apprentice and trainee rates and casual loading issues. However, VIP declined to provide an undertaking that included specific classifications and rates of pay as sought and advised that it was opposed to the wage rates and Wage Schedule being published with the Agreement. It did however proffer an undertaking in the following terms;

The Company undertakes to pay employees covered by the Agreement minimum wages and allowances (where applicable) of not less than the Wages and allowances contained in the 'VIP Packaging Altona North Enterprise Agreement 2023' ('Wage Schedule') dated 3 August 2023, which was provided to the Commission in the application for approval for an enterprise agreement as an exhibit in support of the application.

[6] Following review of VIP's response, the Deputy President sent further correspondence to VIP on 4 September 2023 in which he advised VIP of his preliminary view that unless the specific classifications and rates of pay were included in an undertaking, the Agreement was not capable of approval. VIP was advised that if it was unwilling to provide an undertaking in the terms sought, it may wish to withdraw the application or alternatively may seek to be heard. VIP subsequently confirmed in correspondence later that day on 4 September 2023 that it believed the Agreement was capable of approval as filed and pressed its application. VIP requested additional time to file further detailed submissions in support of the application.

[7] Having regard to the nature of the issue raised by this application, the President then directed that a Full Bench deal with the application pursuant to ss 582 and 615 of the FW Act. The applicant was advised of this in correspondence from Deputy President Masson's chambers on 5 September 2023.

[8] On 6 September 2023, VIP sent further correspondence to the Commission in which it proffered a revised undertaking that specifically included the classifications, rates of pay and allowances contained in the Wage Schedule. We note that the Wage Schedule, while not originally included as a term of the proposed Agreement, was provided to employees during the access period as part of the explanatory materials provided in advance of the ballot. We have had an opportunity to review the consolidated undertakings now provided by VIP and are satisfied they address the concerns raised in relation to the Agreement. Considering the revised undertaking proffered by VIP, it is now unnecessary for us to determine the central issue originally raised by the Deputy President, namely that of the non-inclusion of rates of pay in the Agreement. It is nonetheless appropriate for us to make the following observations.

[9] Absent inclusion of rates of pay in the Agreement, it would not be open for the Full Bench to be satisfied that employees who would be covered by the Agreement would be better off overall as required under s 186(2)(d) of the FW Act. That is so because, while the Award is incorporated into the Agreement by reason of clause 6, such incorporation would only lead to Award rates of pay applying. In the absence of other more beneficial provisions, the BOOT could not be satisfied. In any case, it is apparent that in explaining the terms of the Agreement, VIP provided employees with the rates of pay contained within the Wage Schedule which are significantly higher than the Award rates of pay, and VIP clearly represented to employees that those higher rates of pay would apply even though they were not included as a term of the Agreement. Not including the rates of pay in the Agreement immediately raises a problem with enforcing those rates.

[10] Confronted with the concern that the Agreement did not include the actual agreed rates of pay and allowances, VIP originally proposed an undertaking that referred to the Wage Schedule and committed it to applying those rates as a condition of the Agreement, even though the effect of the proposed undertaking was still that the rates would not appear in the Agreement or in the proposed undertaking. In our view the Deputy President was correct to express a preliminary view that the Agreement was not capable of approval based on that proposed undertaking.

[11] There is some doubt that an undertaking in the form initially proposed by VIP would have the effect of incorporating the rates of pay as a term of the Agreement. Further, VIP's approach in the present matter appears to us to be an attempt to overcome the effect of the Full Bench decision in AWU v Oji Foodservice Packaging Solutions Pty Ltd[2] (Oji), which ruled that the redaction of wage rates in an approved agreement was not permitted. While we accept that the circumstances in Oji, which dealt with the redaction of wage rates in the decision to approve the agreement, was materially different to that of the non-inclusion of rates of pay in the Agreement before us, there are important and similar issues raised in both cases. As with the effect of the redaction of rates in Oji, the non-inclusion of rates of pay in the Agreement before us would bear upon a 'central component'[3] of the Agreement which would be of 'obvious importance'[4] to employees. We also note that the following comments of the Full Bench in Oji are also relevant to the present case:

[12] Finally, we do not believe that the approval of an agreement that failed to disclose the rates of pay employees were entitled to receive would be consistent with the Commission's obligation to perform its functions in an 'open and transparent' manner.[5] Having made these observations, we now turn to the application for approval of the Agreement.

[13] The Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth) (Amending Act) made a number of changes to enterprise agreement approval processes in Part 2-4 of the FW Act, which commenced operation on 6 June 2023. By reason of the transitional arrangements in the Amending Act and the notification time for the Agreement of 30 March 2023, the genuine agreement requirements for agreement approval in Part 2-4 of the FW Act, as it was immediately before 6 June 2023 apply to the present application. Further, as the Agreement was made on 16 August 2023 the better off overall test provisions in Part 2-4 of the FW Act as amended on 6 June 2023 apply.

[14] The Employer has provided written undertakings. A copy of the undertakings is Annexure A to this decision. We are satisfied that the undertakings will not cause financial detriment to any employee covered by the Agreement and that the undertakings will not result in substantial changes to the Agreement. The undertakings are taken to be a term of the Agreement.

[15] Subject to the undertakings referred to above, we are satisfied that each of the requirements of ss 186, 187, 188 and 190 as are relevant to this application for approval have been met.

[16] The United Workers' Union and the 'Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union' known as the Australian Manufacturing Workers' Union (AMWU), being bargaining representatives for the Agreement, have given notice under s 183 of the FW Act that they want the Agreement to cover them. In accordance with s 201(2) of the FW Act we note that the Agreement covers these organisations.

[17] The Agreement is approved and, in accordance with s 54 of the FW Act, will operate from 20 September 2023. The nominal expiry date of the Agreement is 1 July 2026.

VIP Plastic Packaging Pty Ltd [2023] FWCFB 161 (13 September 2023)

At a glance

Court

Decision date

Source

Judgment (16 paragraphs)

VIP Plastic Packaging Pty Ltd [2023] FWCFB 161 (13 September 2023)

Legislation Cited (3)