[2013] FWC 5858 |
FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.185 - Application for approval of a single-enterprise agreement
The Andrew Crawford Group Pty Ltd T/A Crawford Security & Investigations
(AG2013/7190)
SENIOR DEPUTY PRESIDENT O'CALLAGHAN |
ADELAIDE, 19 AUGUST 2013 |
Application for approval of The Andrew Crawford Group Pty Ltd Enterprise Agreement 2013 - application refused.
[1] On 25 June 2013 the Andrew Crawford Group Pty Ltd T/A Crawford Security and Investigations (Crawford), lodged an application for approval of The Andrew Crawford Group Pty Ltd Enterprise Agreement 2013 (the Agreement).
[2] The application did not identify any employee bargaining representatives and subsequent proceedings did not involve any employee representation.
[3] The Agreement is to apply to employees who work as static guards, crowd controllers or "cash in transit escorts". It has a nominal expiry date of four years after the date of approval.
[4] On 5 July 2013 I convened a telephone conference at which I sought advice about the process followed to reach the Agreement and expressed concern that I did not consider that the Agreement met the requirements of the "better off overall test" (BOOT). The employer, represented by Ms Jenkin, of counsel, participated in this conference and undertook to provide additional information relative to a comparison of the Agreement and relevant modern award rates.
[5] This additional information was provided on 11 July 2013. It addressed the concerns I had relative to the agreement making process and the BOOT, with the exception of the crowd controller classification. The employer’s response 1 stated:
“The below comparison shows that the rates/penalties under the Proposed Agreement are higher than the transitional award rates/penalties derived from the Security Award and Security NAPSA for Monday to Friday and overtime work, but are lower for weekend and public holiday work.”
[6] The employer’s response listed three other agreements with application to security industry employers and asserted that:
‘The Applicant submits that if these agreements passed the better off overall test when they were approved, the Proposed Agreement should also be found to pass the better off overall test.
The agreements listed above apply to the Applicant’s competitors and the Applicant wishes to have an enterprise agreement that operates in a similar way to his competitor’s agreements.” 2
[7] On 26 July 2013 I convened a further conference at which I confirmed my concern over the crowd controller wage rates and reiterated my invitation for the provision of an undertaking which established wage rates for that classification commensurate with the Security Services Industry Award 2010 wage rates.
[8] Crawford responded on 2 August 2013 with a submission which requested the approval of the Agreement under s.189 of the FW Act on the basis that the only impediment to approval of the Agreement was the BOOT and that exceptional circumstances existed so as to warrant its approval. In this respect, Crawford identified four security industry agreements which it asserted, operated similarly to this agreement and had been approved by the Commission or its predecessor.
[9] In this further submission, 3 Crawford advised:
“The Applicant acknowledges that the difference between the Saturday, Sunday and Public Holiday rates in the Proposed Agreement and the Award is higher than the difference was between the Saturday, Sunday and Public Holiday rates in the other agreements and the Award at the time that those agreements were approved. However, the Applicant is willing to make undertakings to increase the Crowd Controller rates so that the difference between the Proposed Agreement and the Award rates is approximately the same, or less, than the difference was in relation to the other agreements when they were approved. A copy of those undertakings is attached to these submissions.”
[10] Crawford agreed that, if the pro-offered undertaking was accepted, crowd controller rates under the Agreement would exceed the Award rates for work done on Monday to Saturday inclusive but would continue to be less than the Award rates for work done on Sundays and public holidays. In terms of Sundays, the agreement provides for an hourly rate $7.31 lower than the current Award rate, and, for public holidays, $14.64 lower than the Award.
[11] The Crawford submission detailed wage arrangements in these four other security industry agreements and advised that these businesses represented direct competitors. The submissions 4 stated:
“Because these employers have had these agreements approved by Fair Work Australia they have been able to charge considerably cheaper rates to clients than the Applicant is able to do so.
The Applicant’s clients are questioning why the Applicant cannot charge the same rate as its competitors and have said that they will take their business elsewhere if the Applicant cannot match its competitors’ rates.
If the Applicant is forced to continue applying the Award while its competitors are able to apply their agreements which were approved by Fair Work Australia, it will lose its contracts and go out of business.
If this occurs, the Applicant’s employees would most likely become employed by one of the Applicant’s competitors and their employment would become subject to an agreement which entitles them to lower rates of pay than the Proposed Agreement, which they voted in favour of.”
[12] The application was the subject of a further conference on 8 August 2013 and a hearing on 13 August 2013. At this hearing Crawford provided a statutory declaration made out by Mr Crawford, in which he confirmed four of his direct competitors had agreements that enabled them to charge lower rates to customers than he could do under the Security Services Industry Award 2010. Mr Crawford attached documentary evidence supporting his assertions in this regard and advised that at least two of his customers had confirmed that his Sunday and public holiday rates were not competitive.
[13] Crawford did acknowledge that other, smaller competitors currently operated in this sector of the industry and that other businesses may do so in the future.
[14] The Sunday and public holiday rates paid by the four nominated competitors under their respective agreements represented hourly rates of between $27 and $28. The relevant Security Services industry Award rates are $38.31 and $45.64, for the Sundays and public holidays respectively.
[15] Crawford confirmed that employment as a crowd controller was generally arranged on a casual basis and that the majority of crowd control work occurred on Thursdays to Sundays inclusive.
[16] Crawford reiterated that it sought approval of the agreement pursuant to s.189 on the basis that the disparate approach to agreement approvals relative to crowd control classifications in South Australia represented an exceptional circumstance. Secondly, Crawford asserted that the exceptional circumstance was that the effect of agreement approvals relative to this type of work in South Australia was such that it created a commercial disadvantage, that the requirement in s.577 of the FW Act that the Commission perform its functions in a manner which is fair and just requires consistency in decision-making and hence supports the approval of the Agreement. Further, Crawford asserted that there was minimal chance of the approval of the Agreement giving rise to a broader avoidance of award provisions in that any new company would need to show that it was inhibited from effectively competing with these nominated businesses. In terms of the existing agreements, Crawford argued that there was no obligation for those agreements to be renewed once they had achieved their nominal expiry dates and hence they could have continued operation with lower rates of pay. In response to my concern that, if approved, the Agreement could give Crawford a competitive advantage outside of South Australia, Crawford have provided an undertaking which confirms that it will only cover those crowd controllers when they are engaged to perform that work in South Australia. Crawford asserted that, pursuant to s.189(4), if the agreement was approved, the Commission should specify a nominal expiry date of two years after the date of approval.
Findings
[17] I am satisfied that the application is properly made pursuant to ss.185 and 186 with the exception that, with regard to employees engaged as crowd controllers, I am not satisfied that it meets the requirements of the BOOT. Notwithstanding that Crawford now agrees with this assessment, it is appropriate that I detail the basis upon which I have reached that conclusion. The BOOT requires that, with respect to Crowd Controllers I must conclude that those employees would be better off under the Agreement. In considering the application of the BOOT to the Crowd Controller classification, I have taken into account the advice provided to me to the effect that this work is generally undertaken on a casual basis. The Employer’s Declaration (Form F17) confirms that 22 of the 24 employees covered by the Agreement are casual employees. Crowd Controller work done under the Agreement on Sundays and public holidays is paid at a substantially lower rate than that prescribed by the Award and there is no provision of the Agreement that then ensures that other agreement benefits satisfactorily compensate employees for this shortfall. Even if I assumed that the same employee was engaged to undertake work on weekdays as well as Sundays, approximately the same number of daytime weekday hours would need to be worked to compensate that employee for the shortfall applicable on a Sunday. No advice or undertaking has been provided so as to give me any confidence that this situation will apply. Instead, the evidence confirms that employees under the agreement, who are required to work on Sundays and public holidays will be disadvantaged relative to overall award provisions.
[18] Consequently, because I am not satisfied that the Agreement meets the BOOT requirements, the positive obligation on the Commission to approve the Agreement does not apply.
[19] Section 189 of the FW Act states:
“189 FWC may approve an enterprise agreement that does not pass better off overall test—public interest test
Application of this section
(1) This section applies if:
(a) the FWC is not required to approve an enterprise agreement under section 186; and
(b) the only reason for this is that the FWC is not satisfied that the agreement passes the better off overall test.
Approval of agreement if not contrary to the public interest
(2) The FWC may approve the agreement under this section if the FWC is satisfied that, because of exceptional circumstances, the approval of the agreement would not be contrary to the public interest.
Note: The FWC may approve an enterprise agreement under this section with undertakings (see section 190).
(3) An example of a case in which the FWC may be satisfied of the matter referred to in subsection (2) is where the agreement is part of a reasonable strategy to deal with a short-term crisis in, and to assist in the revival of, the enterprise of an employer covered by the agreement.
Nominal expiry date
(4) The nominal expiry date of an enterprise agreement approved by the FWC under this section is the earlier of the following:
(a) the date specified in the agreement as the nominal expiry date of the agreement;
(b) 2 years after the day on which the FWC approved the agreement.”
[20] I am satisfied that this section enables consideration of the approval application on the basis that the only reason that the Agreement is not required to be approved relates to the BOOT.
[21] This section was considered by Bartel DP in Top End Consulting Pty Ltd 5 and Asbury C in Agnew Pty Ltd.6 In that latter matter the Commissioner (as she then was) stated:
“[9] With respect to determining whether a particular case involves “exceptional circumstances” the following passage from the decision of Vice President Lawler in CEPU v Australian Postal Corporation cited by Deputy President Bartel in Top End Consulting is relevant:
“In summary, the expression ‘exceptional circumstances’ requires consideration of all the circumstances. To be exceptional, circumstances must be out of the ordinary course, or unusual, or special, or uncommon but need not be unique, or unprecedented, or very rare. Circumstances will not be exceptional if they are regularly, or routinely, or normally encountered. Exceptional circumstances can include a single exceptional matter, a combination of exceptional factors or a combination of ordinary factors which, although individually of no particular significance, when taken together are seen as exceptional. It is not correct to construe ‘exceptional circumstances’ as being only some unexpected occurrence, although frequently it will be. Nor is it correct to construe the plural ‘circumstances’ as if it were only a singular occurrence, even though it can be a one off situation. The ordinary and natural meaning of ‘exceptional circumstances’ includes a combination of factors which, when viewed together, may reasonably be seen as producing a situation which is out of the ordinary course, unusual, special or uncommon.”
[10] With respect to the “public interest” consideration in s.189(2) it is true, as observed by Deputy President Bartel in Top End Consulting that the requirement is for the Tribunal to be satisfied that the existence of exceptional circumstances makes the approval of the agreement “not contrary to the public interest” rather than to be satisfied that approval of the agreement is in the public interest. It is also the case that the expression “in the public interest” when used in legislation, is to be determined by making a discretionary value judgment on the relevant facts, constrained only by the scope and purpose of the legislation.
[11] In relation to public interest in the context of the Fair Work Act 2009, Vice President Lawler in Tahmoor Coal Pty Ltd cited the following passage from the Full Bench decision of the Australian Industrial Relations Commission in Re Kellogg Brown and Root Bass Strait (Esso) Onshore/Offshore Facilities Certified Agreement 2000:
“The notion of public interest refers to matters that might affect the public as a whole such as the achievement or otherwise of the various objects of the Act, employment levels, inflation, and the maintenance of proper industrial standards. An example of something in the last category may be a case in which there was no applicable award and the termination of the agreement would lead to an absence of award coverage for the employees. While the content of the notion of public interest cannot be precisely defined, it is distinct in nature from the interests of the parties. And although the public interest and the interests of the parties may be simultaneously affected, that fact does not lessen the distinction between them.”
[12] In my view, public interest considerations in the context of s.189 could involve deciding whether a term of an agreement sought to be approved under that provision, undermines or reduces entitlements in a modern award to the extent that members of the public whose employment is regulated by that award may have interests which are impacted by the approval of the agreement. It may also be the case that there is a public interest consideration in maintaining a level playing field among employees in a particular industry or sector. This is particularly so given that the Objects of the Act include at s.3(b):
“ensuring a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions through the National Employment Standards, modern awards and national minimum wage orders.”
[13] The use of the conjunction “and” in s.189(3) is also relevant. The example deals with circumstances where the agreement is part of a reasonable strategy to deal with a short term crisis in, and to assist with the revival of the enterprise of an employer covered by the Agreement - ie. a revival following a short term crisis and not a revival in general terms.
(references removed)
[22] I think that approach represents the appropriate application of this section.
[23] I have considered whether the fact that the FWC has approved agreements which apply to competitors of Crawford and include wage provisions for crowd controllers which are less than the current award minimums represents an exceptional circumstance for the purposes of s.189(2). In terms of the four agreements to which I have been referred I note that one was approved during the Bridging period and the other three at different test times. Information which may have been provided to the Tribunal members considering those applications is not available to me.
[24] The FW Act requires every member of the FWC to reach conclusions about the BOOT at the relevant test time. Those conclusions will generally take into account each Commission member’s assessment of the information provided by the parties and the circumstances then applicable. Industry is, in my view, entitled to expect a significant degree of consistency, but there will be occasions when there are disparate conclusions relative to similar facts. Traditional hearing and appeal mechanisms are of only limited value in addressing disparate agreement findings in that, generally, the primary focus of the applicant is on achieving approval of an agreement and there is often no party agitating for an alternative position
[25] As a consequence, differences in conclusions about the operation of the BOOT can regularly be identified. Hence, I do not think that there is anything particularly remarkable about differential assessments about the BOOT in a particular industry. Indeed, the nature of the differential test time for the BOOT invites this. Accordingly, there are often circumstances which arise whereby an agreement wage rate falls short of the relevant award provisions at another, later, time.
[26] Secondly, Crawford argues that the circumstances are not simply exceptional in terms of the differential application of the BOOT, but are exceptional in that this has created a situation where Crawford alleges it is now competing on a commercially unsustainable basis with other firms which are able to pay employees below award rates and Crawford is accordingly disadvantaged.
[27] I am unable to regard the situation as exceptional for the purposes of s.189. The reality is that in many circumstances differing agreement provisions impact on competitive situations. If nothing else, this reinforces the importance which the FWC should attach to a consistent application of the BOOT in that, as a general statement, agreement approval decisions or refusals often have a significant commercial impact.
[28] What Crawford seek here is that an agreed and acknowledged BOOT deficiency should effectively be sanctioned on the basis that considerations of commercial equity should be applied. The effect of that would be to sanction the payment of rates of pay less than those provided for under the relevant modern award and, using the same logic, provide a precedent for this to be generally accepted in this sector of the security industry.
[29] Before finalising a conclusion in this respect I have considered the Crawford submission to the effect that, if it is unable to engage Crowd Controllers on reduced payments, so as to match the lower rates paid by its competitors, it is unlikely to win work in this area and hence its employees are more likely to transfer so as to work for businesses which already have agreements which sanction the below award wage rates. That may well be a logical proposition, but I am not satisfied that it meets the requirements of s.189(2).
[30] This section requires that I be satisfied that the approval of the Agreement would not be contrary to the public interest.
[31] Section 134(1) sets out the modern award objective in the following terms:
“134 The modern awards objective
What is the modern awards objective?
(1) The FWC must ensure that modern awards, together with the National Employment Standards, provide a fair and relevant minimum safety net of terms and conditions, taking into account:
(a) relative living standards and the needs of the low paid; and
(b) the need to encourage collective bargaining; and
(c) the need to promote social inclusion through increased workforce participation; and
(d) the need to promote flexible modern work practices and the efficient and productive performance of work; and
(e) the principle of equal remuneration for work of equal or comparable value; and
(f) the likely impact of any exercise of modern award powers on business, including on productivity, employment costs and the regulatory burden; and
(g) the need to ensure a simple, easy to understand, stable and sustainable modern award system for Australia that avoids unnecessary overlap of modern awards; and
(h) the likely impact of any exercise of modern award powers on employment growth, inflation and the sustainability, performance and competitiveness of the national economy.
This is the modern awards objective.”
[32] Consequently, if s.189(2) is applied so as to deliberately sanction an undermining of a modern award provision to facilitate commercial competition, it seems to me that approach is inconsistent with the function and objective of the modern award and must therefore be contrary to the public interest.
[33] In reaching this conclusion I have also taken into account that if the Agreement is approved on the basis sought, it may form the foundation for other similar arguments by businesses seeking to remain competitive in this sector so as to substantially usurp the function of the modern award to set minimum employment conditions.
Conclusion
[34] For the reasons I have set out in this decision, and notwithstanding the undertakings proposed by the employer, I am not satisfied that the Agreement meets the requirements of the BOOT. Further, I am not satisfied that the Agreement, in the circumstances which currently prevail, should be approved pursuant to s.189. Accordingly, the application must be refused.
SENIOR DEPUTY PRESIDENT
Appearances:
E Jenkin counsel for the Applicant.
Hearing details:
2013.
Adelaide:
August 13.
1 Employer response 11 July 2013, para 13
2 Ibid, paras 15 and 16
3 Employer response 2 August 2013, para 9
4 Ibid, paras 16 - 19
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