[2014] FWCFB 7554
FAIR WORK COMMISSION

DECISION


Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
Sch. 6, Item 4 - Application to make a modern award to replace an enterprise instrument.

CSR & Holcim Staff Association
(EM2013/2)

Sugar industry

SENIOR DEPUTY PRESIDENT ACTON
DEPUTY PRESIDENT HAMILTON
COMMISSIONER LEE



MELBOURNE, 15 DECEMBER 2014

Application to make a modern enterprise award to replace the Refined Sugar Services Staff Award 2000 - application refused.

Introduction

[1] On 11 April 2013, the CSR & Holcim Staff Association (the Association) made an application for the Fair Work Commission (the FWC) to make a modern enterprise award to replace an enterprise instrument. The enterprise instrument is the Refined Sugar Services Staff Award 2000 1 (the RSSS Award 2000).

[2] The application was made pursuant to item 4 of schedule 6 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) (the TPCA Act).

[3] This decision determines that application. In doing so we turn to set out the relevant statutory provisions and then consider the application against the statutory provisions, before concluding in respect of the application.

[4] Submissions in respect of the application were made to us by the Association and Wilmar Sugar Pty Ltd (Wilmar). We granted both permission to be represented by a lawyer having regard to the provisions of s.596(2)(a) of the Fair Work Act 2009 (Cth) (the FW Act). We considered it would enable the matter to be dealt with more efficiently, taking into account the complexity of the matter as it involved consideration of provisions of the TPCA Act and their interaction with the FW Act. Further, there was no objection to both sides being so represented.

Statutory provisions

[5] Item 2 of schedule 6 of the TPCA Act defines an “enterprise instrument”.

[6] Item 4 of schedule 6 of the TPCA Act deals with the enterprise instrument modernisation process as follows:

[7] Item 6 of schedule 6 of the TPCA Act is also relevant. It provides as follows:

[8] The modern awards objective is set out in s.134 of the FW Act as follows:

[9] The minimum wages objective is set out in s.284 of the FW Act as follows:

[10] Items 7 and 8 of schedule 6 of the TPCA Act deal with the terms of modern enterprise awards. They provide as follows:

[11] Item 9 of schedule 6 deals with the termination of enterprise instruments and relevantly provides as follows:

[12] Items 4 and 6 of schedule 6 of the TPCA Act were considered by the Full Federal Court of Australia in Yum! Restaurants Australia Pty Ltd v Fair Work Australia Full Bench. 2 In Yum, the Full Federal Court stated:

Consideration of the application

[13] There is no dispute and we accept that the RSSS Award 2000 is an enterprise instrument within the meaning of schedule 6 of the TPCA Act.

[14] The RSSS Award 2000 has the following coverage clause:

[15] The “Employer” is defined in the RSSS Award 2000 as “Refined Sugar Services Pty Limited” (RSS). Wilmar was formally known as RSS, a wholly owned subsidiary of CSR Limited (CSR). The origins of CSR date back to 1855 and a partnership formed to refine sugar. In 1887, The Colonial Sugar Refining Company Limited was established. That company became CSR in 1973. RSS was registered as a company in 1997 and in 1998 a greenfields agreement was made between RSS and the Association. 3

[16] The greenfields agreement provided for RSS to employ persons for the purposes of a joint venture between CSR, Mackay Sugar Co-operative Association Limited (MSL) and E D & F Man Australia Pty Limited (EDF Man) in relation to the sugar refining and processing industry. Prior to that time CSR conducted its own sugar refining and processing business and MSL and EDF Man had an incorporated joint venture known as Mackay Refined Sugars Pty Limited (MRS) to conduct sugar refining and distribution operations. Some employees from CSR and MRS were employed by RSS. The greenfields agreement was certified by the Australian Industrial Relations Commission (AIRC) and provided for an employee’s terms and conditions of employment prior to them being employed by RSS to be maintained for the life of the greenfields agreement, subject to a harmonisation process. Immediately prior to their employment with RSS, the relevant employees of CSR were covered by the CSR Staff (Consolidated) Award 1998. 4 Later more CSR employees transferred to Wilmar.

[17] Wilmar is presently the largest producer of raw and refined sugar in Australia. Wilmar also has a significant renewable energy business through its ethanol production and electricity cogeneration operations.

[18] The salaried employees of Wilmar covered by the RSSS Award 2000 work in one of four business units, being Cane Products, Bio-ethanol, the Wilmar Group headquarters and the Sugar Australia joint venture.

[19] An “Employee” is defined in clause 5 of the RSSS Award 2000 as “a salaried employee of the Employer employed at a yearly rate of pay by the Employer or on secondment to any subsidiary or any associated company of the Employer.”

[20] The “Association” is defined in clause 5 of the RSSS Award 2000 as the “CSR & Rinker Salaried Staff Association”, a predecessor to the applicant in the matter before us.

[21] As we have indicated, the application before us was made to the FWC on 11 April 2013.

[22] In these circumstances we are satisfied the application before us conforms with item 4(3) of schedule 6 of the TPCA Act.

[23] We turn then to the other matters in item 4 of schedule 6 of the TPCA Act.

The circumstances that led to the making of the enterprise instrument rather than an instrument of more general application (Item 4(5)(a))

[24] The RSSS Award 2000 was made by the AIRC in 2001 in settlement of an industrial dispute founded on a log of claims served by the Association in 1999. The RSSS Award 2000 was made by consent. The RSSS Award 2000 was made essentially in mirror terms to the CSR Staff (Consolidated) Award 2000 5 (CSR Award 2000).

[25] The CSR Award 2000 had its origins in a consent award made in settlement of an industrial dispute in 1944, 6 which was varied thereafter almost invariably by consent between the Association or its predecessors and CSR or its predecessors. The CSR Award 2000 and its predecessors rather than an instrument of more general application largely appear to have been made pursuant to the consensual settlement of industrial disputes limited to the Association or its predecessors, on the one part, and CSR or its predecessors and subsidiaries, on the other part, having regard to the confined eligibility rule of the Association and its predecessors. The current eligibility rule of the Association, which is set out below, does not seem to be relevantly different from that of the originally registered organisation.

[26] Since the RSSS Award 2000 was made it has essentially been varied by consent to reflect safety net review, annual wage review or test case decisions.

Whether there is a modern award (other than the miscellaneous award) that would, but for the enterprise instrument, cover the persons who are covered by the instrument, or whether such a modern award is likely to be made in the Part 10A award modernisation process (Item 4(5)(b))

[27] As we have indicated, the “application and duration” clause of the RSSS Award 2000 relevantly provides as follows:

[28] The membership rule of the Association relevantly provides as follows:

[29] “Salaried employee” is defined in the rules of the Association as meaning “a person employed by the Company at a yearly rate of pay but does not include the Managing Director and such other executive officers of the Company as shall be agreed between the Association and the Company from time to time.”

[30] “The Company” is defined in the rules of the Association as including CSR and any subsidiary of CSR, Wilmar Australia Pty Ltd in respect of its sugar industry and related renewable energy businesses and any subsidiaries of Wilmar Australia Pty Ltd in respect of its sugar industry and related renewable energy businesses.

[31] The “rates of pay” clause of the RSSS Award 2000 relevantly provides as follows:

[32] The Association and Wilmar submit, and we accept, that the following modern awards would cover some 245 of the 667 persons who are covered by the RSSS Award 2000 but for that enterprise instrument:

[33] The Association and Wilmar also submit that some 422 of the other 667 salaried employees covered by the enterprise instrument would not be covered by any modern award but for the enterprise instrument. These salaried employees include senior business managers, professional engineers, accountants, administration officers, legal professionals, human resource professionals, Information Technology professionals, production engineers, project managers, logistics professionals, farming professionals and sales professionals.

[34] We sought further submissions from the parties as to why any or all of these other 422 salaried employees were not covered by a modern award (other than the miscellaneous award).

[35] In response they submitted that their consideration of notional modern award coverage of the salaried employees involved a review of written job descriptions and, where for individual senior positions no job description was available, oral descriptions of duties. Further, they submitted it involved the principals that coverage of individual employees is determined by:

[36] They then went on to submit the following:

[37] These further submissions have not enabled us to assess whether or not all or any of the 422 salaried employees said not to be covered by a modern award would be covered by a modern award (other than the miscellaneous award) but for the enterprise instrument. We were not provided with the job descriptions and oral description of duties information on which they based their assessment. However, we are prepared to assume a significant number of the salaried employees would not be covered by any such modern award.

The content, or likely content, of the modern award referred to in item 4(5)(b) of schedule 6 of the TPCA Act (taking account of any variations of the modern award that are likely to be made in the Part 10A award modernisation process) (Item 4(5)(c))

[38] The content of the modern awards to which we have just referred are terms and conditions of employment largely set having regard to the content of relevant predecessor industry and/or occupational awards and notional agreements preserving state awards, as well as legislative requirements concerning the making, variation and review of modern awards.

[39] Some of the terms and conditions of employment in these modern awards that would cover the salaried employees but for the RSSS Award 2000 are more beneficial for those employees and less beneficial for Wilmar than those in the RSSS Award 2000. Such as the casual loading and/or some penalty rates and part-time engagement provisions.

[40] Other provisions of these modern awards are less beneficial for the salaried employees covered by the RSSS Award 2000 and more beneficial for Wilmar than those in the RSSS Award 2000, as we indicate below.

The terms and conditions of employment applying in the industry in which the persons covered by the enterprise instrument operate, and the extent to which those terms and conditions are reflected in the instrument (Item 4(5)(d))

[41] In regard to item 4(5)(d) of schedule 6 of the TPCA Act, the Association and Wilmar submitted there are two expired site-specific workplace agreements that apply to a limited number of the salaried employees covered by the RSSS Award 2000. Those workplace agreements are:

[42] They submitted these two workplace agreements “are in terms that directly reflect and rely on provisions of the RSSS Award [2000], and which (consistently with the RSSS Award [2000]) additionally prescribe site-specific hours of work and shift roster arrangements, and provide for minimum salary rates.” These two workplace agreements were preceded by a certified agreement.

[43] They also submitted that Wilmar’s next-largest competitors in the sugar industry are:

[44] The Association and Wilmar submitted that they were not aware of any “competitor enterprise award” covering salaried employees. Further, they submitted the enterprise agreements of the abovementioned competitors do not cover salaried employees, with the exception of clerical staff in some instances. The Association and Wilmar provided tables comparing the hours provisions across various industrial instruments including enterprise agreements, relevant modern awards, the FW Act and workplace agreements.

[45] The Association and Wilmar also provided tables comparing the terms and conditions of employment in essentially the RSSS Award 2000 compared to the terms and conditions of employment in relevant modern awards. They submitted the following terms and conditions were less beneficial for the salaried employees in the relevant modern awards:

[46] We accept these submissions, while recognising their limits. Such limits include that:

The extent to which the enterprise instrument provides enterprise-specific terms and conditions of employment (Item 4(5)(e))

[47] The enterprise instrument is the RSSS Award 2000. The enterprise-specific terms and conditions of employment in the RSSS Award 2000 highlighted to us included:

[48] We accept the RSSS Award 2000 contains some enterprise-specific terms and conditions of employment. However, we are also aware that:

The likely impact on the persons covered by the enterprise instrument, and the persons covered by the modern award referred to in item 4(5)(b) of schedule 6 of the TPCA Act, of a decision to make, or not make, the modern enterprise award, including any impact on the ongoing viability or competitiveness of any enterprise carried on by those persons (Item 4(5)(f))

[49] In regard to item 4(5)(f) of schedule 6 of the TPCA Act, the Association and Wilmar submitted that the effect on salaried employees covered by the RSSS Award 2000 of a decision to make their proposed modern enterprise award would be that existing and long-standing conditions of employment which are consistent across groups of employees would be retained.

[50] Further, they submitted the effect on salaried employees covered by the RSSS Award 2000 of a decision not to make their proposed replacement enterprise award would be:

[51] They submitted their proposed modern enterprise award would not have any impact on the ongoing viability or competitiveness of Wilmar, as it largely replicates the RSSS Award 2000. In addition, the salaried employees’ actual rates of pay are greater than those in the RSSS Award 2000 and are set by agreement under contracts of employment.

[52] They also submitted the lack of a modern enterprise award would have an ongoing negative impact on the bargaining position of the salaried employees, there being no general history of them enterprise bargaining for terms and conditions of employment.

[53] They went on to submit that loss of access to the safety net represented by the RSSS Award 2000 would cause significant disruption to the Wilmar business.

[54] We think that when the totality of considerations is taken into account the likely impact on the persons covered by the RSSS Award 2000 of a decision to make a modern enterprise award is that the existing terms and conditions of employment of the salaried employees as set out in the RSSS Award 2000 would largely be maintained through the modern enterprise award, with the history at Wilmar and its predecessors suggesting that generally no enterprise agreements covering those salaried employees would be made. It is likely there would be no detrimental impact on the ongoing viability or competitiveness of any enterprise carried on by the persons covered by the RSSS Award 2000.

[55] The likely impact on the persons covered by the RSSS Award 2000 of a decision not to make a modern enterprise award would, in the short run, be:

[56] Although for those to whom the two earlier mentioned workplace agreements covering Wilmar apply, the change is likely to be notional.

[57] However, given this impact if a modern enterprise award is not made, we think it is likely that there would quickly be collective bargaining between Wilmar and the salaried employees and their bargaining representatives for the making of an enterprise agreement or enterprise agreements. The attempts of the Association and Wilmar to persuade us that this is not likely were unconvincing, 28 particularly given the history of consent in respect of the terms and conditions of employment in the RSSS Award 2000 and the negotiation of the proposed modern enterprise award and the immediate impetus afforded by a modern enterprise award not being made, including the content of the modern awards that would then apply. As a consequence, it is likely the ongoing viability or competitiveness of the enterprise carried on by them would not be detrimentally impacted.

[58] We think the likely impact on the persons covered by the relevant modern awards of a decision to not make the modern enterprise award would be that they would be subject to the same modern award coverage as those currently covered by the RSSS Award 2000 when that enterprise instrument terminates on the decision to not make the modern enterprise award. It is not evident that there would be any detrimental impact on the ongoing viability or competitiveness of an enterprise carried on by them. The likely impact on such persons of a decision to make the modern enterprise award would largely be the status quo, with no detrimental impact on the ongoing viability or competitiveness of any enterprise carried on by them.

The views of the persons covered by the enterprise instrument (Item 4(5)(g))

[59] We accept that the Association and Wilmar support the making of a modern enterprise award. According to a plebiscite of the salaried employees covered by the RSSS Award 2000, the vast majority of such employees support the application to preserve their award conditions in the proposed modern enterprise award. At the time of the plebiscite the Association and Wilmar proposed modern enterprise award had terms and conditions of employment similar to those in the RSSS Award 2000. Before us the Association and Wilmar proposed amendments to their proposed modern enterprise award to include some conditions more beneficial for the salaried employees.

Any other matter prescribed by regulations (Item 4(5)(h))

[60] There are no other matters prescribed by the regulations.

Discretion

[61] In the exercise of our discretion, in addition to matters previously raised, the Association and Wilmar submitted in support of the making of a modern enterprise award that:

Conclusion

[62] We are not persuaded to make a modern enterprise award to replace the RSSS Award 2000.

[63] Our consideration of the factors in item 4(5) of schedule 6 of the TPCA Act indicates that the likely impact on the persons covered by the RSSS Award 2000 of a decision to not make such a modern enterprise award would be some short run changes. However, there would quickly be collective bargaining between Wilmar and the salaried employees and their bargaining representatives for the making of an enterprise agreement or enterprise agreements.

[64] Not making the modern enterprise award would thereby overcome the historical inertia with respect to such collective bargaining, with attendant opportunities from further enterprise agreements of enhanced “productivity and fairness”. 29

[65] The likely impact of a decision to make such a modern enterprise award on the persons covered by the RSSS Award 2000 would be largely the maintenance of the terms and conditions of employment in the RSSS Award 2000 in the modern enterprise award and, consistent with the history between the persons, no enterprise agreement being made.

[66] In either instance, it is likely there would be no detrimental impact on the ongoing viability or competitiveness of the enterprise carried on by them.

[67] The likely impact on the person covered by the relevant modern awards of a decision to not make the replacement modern enterprise award would be that they would be subject to the same modern award coverage as those currently covered by the RSSS Award 2000 when that enterprise instrument terminates on the decision to not make the replacement. It is not evident that there would be any detrimental impact on the ongoing viability or competitiveness of any enterprise carried on by them. The likely impact on such persons of a decision to make the replacement modern enterprise award would largely be the status quo, with no detrimental impact on such ongoing viability or competitiveness.

[68] But for the RSSS Award 2000, a substantial number of the persons covered by the RSSS Award 2000 would be covered by one of the modern awards to which we have earlier referred, with a significant number not being covered by any modern award. Precisely how many would be award-free is unclear. As to the content of the modern awards, their terms and conditions of employment have been largely set having regard to the content of relevant predecessor awards and NAPSAs and legislative requirements. Some of the provisions in the modern awards are more beneficial and some less beneficial for the salaried employees covered by the RSSS Award 2000 and, consequently, less and more beneficial for Wilmar than those in the RSSS Award 2000.

[69] Not making a modern enterprise award for those persons covered by the RSSS Award 2000 would result in them generally having more similar arrangements in respect of their terms and conditions of employment to those that apply in the industries in which they operate. In those industries some employees are covered by the modern awards and others are award-free and an enterprise agreement applies to some employees who are the equivalent of some of those covered by the RSSS Award 2000. As to the actual terms and conditions of employment applying in those industries, the subject matters of those terms and conditions are generally reflected in the RSSS Award 2000. However, the content of the subject matters often varies from that in the RSSS Award 2000, with the content in the RSSS Award 2000 in some instances being more beneficial and in other instances being less beneficial for the salaried employees covered by the RSSS Award 2000 and, consequently, less and more beneficial for Wilmar.

[70] The RSSS Award 2000 contains enterprise-specific terms and conditions of employment. However, the enterprise-specific terms and conditions of employment highlighted to us are available at least in part under the NES or the relevant modern awards that would cover the salaried employees covered by the RSSS Award 2000 but for that enterprise instrument and/or are of limited application.

[71] The circumstances that led to the making of the RSSS Award 2000 rather than an instrument of more general application was the consent settlement of an industrial dispute founded on a log of claims served by a predecessor to the Association having regard to its confined eligibility rule. The RSSS Award 2000 essentially mirrored the CSR Award 2000. The CSR Award 2000 having its origins in a consent award made in settlement of an industrial dispute in 1944 and varied almost invariably by consent thereafter. Such awards and variations being made in settlement of industrial disputes limited by the confined eligibility rule of the predecessors to the Association.

[72] Clearly the Association and Wilmar and the salaried employees covered by the RSSS Award 2000 support the making of a modern enterprise award to replace the RSSS Award 2000.

[73] The FWC must apply the modern awards objective and the minimum wages objective to the making of a modern enterprise award, while recognising modern enterprise awards may provide terms and conditions tailored to reflect employment arrangements that have been developed in relation to the relevant enterprises. The modern awards objective requires the FWC to take into account, amongst other things, the need to encourage collective bargaining.

[74] In our view, in this case the likely impact on the persons covered by the RSSS Award 2000, and the persons covered by the relevant modern awards, of a decision to make, or not make, the modern enterprise award strongly supports not making the modern enterprise award to replace the RSSS Award 2000. As we have indicated, if we do not make the modern enterprise award the likely impact would quickly be collective bargaining between Wilmar and the salaried employees and their bargaining representatives for the making of an enterprise agreement or enterprise agreements. We regard the other factors in item 4(5) of schedule 6 of the TPCA Act as supporting the making of the modern enterprise award, although some of the other factors do not unambiguously do so. Nonetheless, in this case the other factors in item 4(5) of schedule 6 of the TPCA Act are not sufficient in our view, either individually or collectively, to outweigh the strong support item 4(5)(f) of schedule 6 provides for not making the modern enterprise award.

[75] Further, we are not persuaded by the discretionary matters submitted by the Association and Wilmar to make a modern enterprise award to replace the RSSS Award 2000. We have already dealt with some of these directly or indirectly. In addition, we point out that it is not evident why they did not participate in the making of modern awards or how their participation would have affected the outcome, and not making the modern enterprise award is not contrary to the content of objects of the FW Act or the relevant objectives and may well promote much of it.

[76] There are various Full Bench decisions concerning the making of modern enterprise awards and/or the termination of enterprise instruments. However, those decisions tend to turn on the facts relevant to them.

[77] For the above reasons therefore, we have decided not to make a modern enterprise award to replace the RSSS Award 2000. Pursuant to item 9(3) of schedule 6 of the TPCA Act, the RSSS Award 2000 therefore terminates at the date of this decision.

Seal of the Fair Work Commission with member's signature.

SENIOR DEPUTY PRESIDENT

Appearances:

S. Crawshaw, senior counsel, with N. Keats for CSR & Holcim Staff Association.

P. Wheelahan, counsel, with T. Lange for Wilmar Sugar Pty Limited.

Hearing details:

2014.

Sydney:

October 2.

Final written submissions:

Supplementary joint submissions of the parties, 10 October 2014.

 1   AP805398.

 2   (2012) 214 IR 434.

 3   Refined Sugar Services Pty Limited Staff Employees Certified Agreement 1998, AG795372.

 4   Print Q9684.

 5   AP777812.

 6   The Colonial Sugar Refining Company Limited Professional and Clerical Officers Association of Australia v The Colonial Sugar Refining Co. Ltd, Print 5944; (1944) 51 CAR 885.

 7   MA000002.

 8   MA000083.

 9   MA000065.

 10   MA000087.

 11   Supplementary joint submissions of the parties dated 10 October 2014 at paragraph 8.

 12   Supplementary joint submissions of the parties dated 10 October 2014.

 13   CAUN085331118.

 14   CAUN08437201.

 15   Transcript in EM2013/2 at PN189.

 16   The Colonial Sugar Refining Company Limited Professional and Clerical Officers Association of Australia v The Colonial Sugar Refining Co. Ltd. Print 5944; (1944) 51 CAR 885.

 17   Ibid.

 18   Ibid.

 19   Ibid.

 20   Print C4761; (1976) 174 CAR 768.

 21   Print Q9684.

 22   Print K2636.

 23   Print P3598.

 24   MA000065.

 25   MA000002.

 26   MA000065.

 27   MA000087.

 28   See, for example, transcript in EM2013/2 at PN60, 102-104, 114-118, 144-146, 152, 160, 165-167 and 173.

 29   Fair Work Act 2009 (Cth), s.3(f).

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<Price Code G, AP805398 PR556992>