Fair Work Act 2009
s.185—Enterprise agreement

Mondex Group Pty Ltd
(AG2014/9336)

Application for approval of the Mondex Group (Agribusiness) Enterprise Agreement 2014, no exceptional circumstances, contrary to public interest to approve agreement.

[1] This decision concerns an application made under s.185 of the Fair Work Act 2009 (the Act) for approval of an enterprise agreement known as the Mondex Group (Agribusiness) Enterprise Agreement 2014 (the Agreement). The Agreement covers Mondex Group Pty Ltd (the employer or Mondex) and employees engaged in the agribusinesses of the employer. The employer described its business as the provision of labour hire for meat, poultry and seafood processing. 1

[2] As I had concerns about a number of the provisions of the Agreement, I conducted a conference to discuss those concerns with the parties. As the concerns I had were not resolved in the conference I then conducted a hearing so as to provide an opportunity for the applicant to call evidence and make submissions. Having considered all of the evidence and submissions, I have decided to refuse approval of the Agreement. I am not persuaded it passes the better off overall test. The requirement for an agreement to do so is contained in s.186(2)(d). 2 I am not satisfied that, consistent with s.189 of the Act, there are exceptional circumstances such as to warrant me finding that the approval of the Agreement would not be contrary to the public interest. For reasons I give later in this decision, the concerns I have are not able to be met by the giving of undertakings.

[3] Section 189 is a key provision addressed by the applicant in this matter. It is in these terms:

“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.”

[4] To place my findings in context, I should refer to the terms of the Agreement and the Forms F16 and F17 which accompanied its filing. Mondex filed the application for approval of the Agreement. In its Form F16, it identified an enterprise agreement known as the Agribusiness Enterprise Agreement 2013 (Agribusiness Agreement) as being another agreement which had been dealt with by the Fair Work Commission (Commission) that was in identical or substantially identical terms. It noted that it had been approved with undertakings. 3 There were no union bargaining representatives involved in the Mondex agreement-making process, however there were employee bargaining representatives. Fifty nine instruments of appointment were signed by an employee and given to the employer. Although it is not clear from the Form F16, I was subsequently informed that the instruments of appointment nominated seven employee bargaining representatives.

[5] In the Form F17, the scope of the Agreement was described as covering meat, poultry and seafood process operators. It appears that all of the employees who voted on the Agreement are from a non-English-speaking background and predominantly speak Chinese (Mandarin) or Korean as their first language. The notice of representational rights was provided to employees in both an English version as well as one transcribed into Mandarin and Korean. The form indicates in answer to questions 2.6 and 2.7 that employees were provided with a copy of the Agreement translated into their native language and that the contents of the Agreement were explained in their native language.

[6] The Form F17 indicates that 94 employees would be covered by the Agreement and that same number of employees cast a valid vote. Sixty-one of them voted to approve the Agreement. I note that all employees who voted appear to be engaged at sites in the state of New South Wales. However, the Agreement is proposed to operate throughout Australia with the exception of the Australian Capital Territory. I also note that all of the 94 employees who voted on the Agreement were engaged as casuals. The statutory declaration indicates that the employer commenced operations in 2013. 4

[7] In answer to question 3.1 in the Form F17, three modern awards relevant to the better off overall test are identified as the Meat Industry Award 2010 5 (Meat Industry Award), Poultry Processing Award 20106 (Poultry Processing Award) and the Seafood Processing Award 20107 (Seafood Processing Award). In answer to questions concerning the better off overall test, the form indicates that there are no terms and conditions in the Agreement that are more beneficial than the equivalent terms and conditions in the relevant modern awards. It indicates that there are terms that are less beneficial and nominates clause 17.3 of the Agreement as an example. It describes that clause as providing “the opportunity for an employee to voluntarily agree to work additional hours at the ordinary rates of pay rather than overtime rates”. In response to questions about “exceptional circumstances”, the employer indicates it does not think the Agreement passes the better off overall test but considers there are exceptional circumstances which should be taken into account. Clause 17.3 of the Agreement is again referred to, as are the Agribusiness Agreement and another decision approving another enterprise agreement which I will refer to later.

[8] I now turn to the terms of the Agreement. As a general comment, I should indicate that it is not a document drafted in a manner that allows for ease of understanding. The meaning of a number of its clauses is unclear as is the manner in which certain clauses are to be read together with other seemingly inconsistent terms. There is little justification for this with any enterprise agreement filed for approval; however, in this case it is particularly unfortunate. This is a document that is proposed to regulate terms and conditions of employees who do not appear to have been represented by any persons with relevant workplace relations experience and for whom English is not their first language. On numerous occasions, Mr McMahon, the representative of the employer, conceded that the drafting of the document was not ideal but that the employer had chosen to adopt its wording as it was based largely on the Agribusiness Agreement. 8

[9] I should also here indicate that I have concentrated on the provisions of the Agreement which, in my opinion, operate in a manner that would not result in employees being better off overall by comparison to the relevant modern award/s. Had I not these concerns, there were other provisions in the Agreement that would have required attention. I give as one example clause 7, the stand down and suspension of employees clause. Consideration might also have been required to be given to the manner in which that clause could have operated by reference to the stand down provisions in the Act. I also note the clause gives the employer a right to suspend an employee, either with or without pay, for a period of up to five working days for a range of reasons including inefficiency, poor attendance or breach of company policy. Another example is clause 19 which is titled “Setoff”. The clause provides that the employee authorises the employer to deduct from any amounts payable to the employee “any amount owing by the Employee to the Employer, except for amounts that the Employer is not entitled by law to set-off.” Consideration would need to be given to ss.323 to 327 of the Act and regulation 2.12.

[10] The submissions and evidence establish that, at the time of making the Agreement, the employees were engaged in meat processing and would be covered by the Meat Industry Award. There was no evidence of any earlier enterprise agreement covering these employees. I note that Appendix B to the Agreement is titled “Key to Agreement Rates”. This appendix sets out the Agreement levels and corresponding “Award Level” base hourly rate and a casual rate in respect of “Meat”, “Poultry”, and “Seafood processing”. No doubt these were intended to be references to the three relevant modern awards, and an employee was expected to know the names of those awards by reference to Appendix A to the Agreement. In my opinion, an employee reading Appendix B would not readily understand where the rate titled “Award Level” was to be found. As I have concentrated on the issue of whether the Agreement should be approved under s.189 of the Act, I did not pursue these matters in any detail with the employer and have proceeded, for the purposes of this decision, on the basis the explanation given to employees as to how the Agreement would operate was adequate.

[11] Clause 5 of the Agreement provides that it represents a “complete statement of mutual rights and obligations between the Employer and Employees and shall exclude, all Modern Awards or any other industrial instrument and/or like instruments or arrangements unless expressly prescribed otherwise by this agreement”.

[12] Clause 6.2 is titled “Probation”. It requires new employees to undergo a six-month probationary period.

[13] Clauses 10 and 11 deal with the ordinary hours of work for permanent and casual employees, respectively. I will concentrate on the clause for casual employees as, at the time the Agreement was voted on, all employees were engaged as casuals. In any event, similar provisions are in each of the clauses. I will reproduce clause 11.

“11. ORDINARY HOURS OF WORK - CASUAL EMPLOYEES

11.1 The ordinary hours for a casual Employee shall not exceed 38 hours in any pay week.

11.2 A maximum of 8 hours per day may be worked on anyone day or shift however, by agreement with the employee concerned this can be extended to ten (10) hours. The minimum ordinary hours for any rostered shift will be four hours.

11.3 Ordinary hours may be worked within a spread between 6:00am and 6:00pm (except for Employees who are subject to provisions of clause 118 inclusive of meal breaks, Monday to Friday inclusive provided that where an Employee makes a request and the Employer agrees, the days or shifts on which ordinary hours are worked may include Saturday and Sunday. Only Employees who are listed in Appendix A can make such a request.

11.4 The spread of hours provided for in clause 11.3 may, by mutual agreement between the Employer and the Employee(s) concerned, be varied to any other such times as the Employer and Employee(s) may agree provided that any such spread of hours will not exceed a spread of more than twelve (12) hours.

11.5 A casual Employee is entitled to receive a 10 hour break between shifts provided that any Employee may be given a shorter break between shifts having regard to the duration of the shift that has been worked, the time it would take for the Employee to reach their place of abode and the wishes of the Employee themselves. If a dispute arises with respect to the use of this subclause the matter shall be dealt with under the dispute resolution clause in this Agreement.


11.6 Casual Employees shall be entitled to a meal break of up to thirty (30) minutes during each engagement where five (5) hours or more are to be worked, such meal break shall be in the Employee’s time.

11.7 Casual Employees shall be entitled to one (1) rest break of up to twenty five (25) minutes where eight (8) or more hours are worked on anyone day or shift, provided that only ten (10) minutes of the said twenty five (25) shall be without deduction of pay. Provided further that rest breaks may be taken as mutually agreed between the Employer and the Employee so long as the rest break does not interfere with the work being performed.

11.8 Ordinary hours for casual Employees whose conditions of employment would have been governed by the Meat Industry Award 2010 but for this Agreement, may be worked within a spread of hours from 6:00am to 8:00pm.

The spread of hours may be altered by up to one hour at either end of the spread of hours inclusive of meal breaks, Monday to Friday inclusive provided that where an Employee makes a request and the Employer agrees, the days or shifts on which ordinary hours are worked may include Saturday and Sunday. Only Employees who are listed in Appendix A can make such a request.”

[14] Clause 12 is titled “Shiftwork” and provides that an employee may be engaged to perform shiftwork on an afternoon or night shift. It contains no provision for any penalties to be paid for the working of either shift. The comments I make below about clause 14.2 are relevant to this matter.

[15] Clause 13 is titled “Classifications”. It provides that there are 16 levels of payment in the Agreement which reflect the “varying duties an employee may be required to perform...”.

[16] Clause 14.1 sets out the minimum hourly rates of pay for ordinary hours worked. It contains 16 levels. At Level 1, the rate is the same as the lowest ordinary hourly rate in any of the three modern awards I have mentioned in paragraph [7]. At Level 16, the rate is the same as the highest ordinary hourly rate in any of those awards. The rates in between appear to reflect the same hourly rates contained in one or other of the three awards.

[17] Clause 14.2 provides that the hourly rates are not “inclusive of penalties, disabilities and allowances” associated with work and an employee is entitled to “the payment of any allowance subject to and in accordance with the provisions of any applicable award which would have otherwise apply to the employer, but to the operation of this agreement”. It is unclear if the second reference to “allowances” is intended to incorporate all “penalties disabilities and allowances” or fewer payments ie only allowances. In relation to shift allowances, I note that at the foot of Appendix B to the Agreement, which sets out hourly rates for employees, there is an entry which reads “NOTE: Shift allowance to be added where the employee is employed as a shiftworker.” The amount of the allowance is not identified. Had I needed to consider the giving of undertakings pursuant to s.190 of the Act, the manner in which these provisions were to operate would need to be addressed.

[18] Clause 17 is titled “Overtime” It is in the following terms:

“17. OVERTIME

17.1 The Employer may request that an Employee performs a reasonable amount of overtime. All time worked in excess of the ordinary hours or outside the spread of hours as defined in clauses 10, 11 and/or 12 of this agreement will be deemed overtime.

17.2 All overtime will be paid for at the rate of double time.

17.3 Notwithstanding the above clauses, an Employee may voluntarily agree to perform overtime. If such Employee agrees to voluntarily perform overtime then they will be paid at the rates provided for in clause 14 or 15 of this Agreement. This clause 18.3 only applies to the category of Employees listed in Appendix A.”

[19] I assume the reference in the last sentence to clause 18.3 is in error and in fact it should have been a reference to clause 17.3.

[20] Clause 18 deals with Public Holidays. It is only necessary to set out the terms of clause 18.3:

“18.3 Notwithstanding the provisions of clause 19.2, an Employee may choose voluntarily to work on a Public Holiday. If an Employee does choose to voluntarily work on a Public Holiday then they will be paid the hourly rates contained in clause 14 or 15 of this Agreement. This clause 19.3 only applies to the category of Employees listed in Appendix A.”

[21] I assume the reference in the first sentence to clause 19.2 is in error and is meant to be a reference to clause 18.2. Similarly, I assume that the reference in the last sentence to clause 19.3 is in error and in fact it should have been a reference to clause 18.3.

[22] I should next reproduce the terms of Appendix A to the Agreement. It is in these terms:

“APPENDIX A - Hours of Work

The operation of the voluntary hours provisions in this Agreement is only available to Employees who can establish a genuine need and are:

(a) Employees engaged at meat manufacturing, processing and retail establishments who would have otherwise (but for the operation of the Agreement) been covered by the Meat Industry Award 2010 where those businesses are subject to seasonal fluctuations;


(b) Employees who would have otherwise (but for the operation of the Agreement) been covered by the Poultry Processing Award 2010 where those employees work at businesses which are seasonal in nature;


(c) Employees who would have otherwise (but for the operation of the Agreement) been covered by the Seafood Processing Award 2010 where those employees work at businesses which are seasonal in nature.”

[23] Appendix B to the Agreement is titled “Key to Agreement Rates”. I have earlier described some parts of it. It has three sections, each of which contains four columns. The columns are the “Agreement Level”, “Award Level”, “Base Hourly” (rate) and “Casual Rate”. I understand that the title of the sections, “Meat”, “Poultry” and “Seafood Processing”, respectively, are intended to be a reference to the three modern awards. The base hourly rates and casual rates for the Agreement are for exactly the same amount as provided for in the relevant modern award.

[24] I turn to the relevant modern award provisions. I will concentrate on the Meat Industry Award as the evidence establishes that, currently, it is only that award which covers the employer and its employees. Clause 15 deals with casual employment. I should set out some provisions of the clause.

“...

15.9 A casual employee, for each ordinary hour worked or part thereof, will be paid at the rate of:

(a) 1/38th of the appropriate weekly rate prescribed in clause 19—Minimum wages; plus
(b) a casual loading of 25% based on that hourly rate.

15.10 Notwithstanding clause 15.9, the loading received by a casual who works ordinary hours on a Saturday or Sunday, where ordinary hours are permitted by this award, the appropriate weekend loadings as set out in clause 31—Hours of work will apply.

15.11 A casual employee who works overtime does not receive the loading set out in clause 15.9(b) but receives, instead, the overtime penalty rates set out in clause 36—Overtime for the period worked.

15.12 A casual employee employed on shiftwork will, in addition to the casual loading set out in clause 15.9, be paid the appropriate shift penalty based on the ordinary hourly rate excluding the casual loading.

15.13 Casual employees will be notified wherever possible of their starting and finishing times for the period of their engagement at the commencement of their engagement.”

[25] Clause 19 sets out the minimum wages. It contains eight classifications and a minimum weekly wage for each. I do not need to reproduce it. It is sufficient to indicate that the Agreement reflects ordinary hourly rates and casual hourly rates derived from those minimum weekly rates of exactly the same amounts.

[26] Clause 28.1 deals with higher duties. It provides that, where an employee is engaged for two hours on any day on duties carrying a higher rate than their ordinary classification, they are to be paid the higher rate for such a day. If the time is for less than two hours, the employee is to be paid for two hours at the higher classification rate.

[27] Clause 31.2(f) provides that, in a meat processing establishment, the Monday to Friday spread of ordinary hours are between 6am and 8pm. The spread of ordinary hours may be altered by up to one hour on either side. Ordinary hours may be worked on a Saturday and Sunday.

[28] Overtime is dealt with in clause 36. It is in these terms:

“36. Overtime

36.1 Entitlement to overtime and payment

(a) All time worked outside ordinary working hours as prescribed in clause 31—Hours of work (or in the case of a shiftworker, outside the hours rostered as ordinary shiftwork hours in accordance with clause 34—Rostering) will be deemed to be overtime and be paid for at time and a half for the first three hours and double time thereafter.


(b) All overtime worked on a Sunday in meat processing establishments must be paid at double time with a minimum payment of four hours.”

[29] Payment for work on a public holiday is dealt with in clause 40.2. In summary, it requires payment at double time for all employees (including casuals) who work on Christmas Day and Anzac Day, and at time and a half for the first four hours of work on Good Friday and double time thereafter. Any other public holiday will be paid at time and a half for the first two hours and double time thereafter.

[30] I will not refer in detail to the provisions of the Poultry Processing Award. It is sufficient to note that it provides for a 25% loading to be paid to an employee who is engaged as a casual. 9 Clause 21 provides for a higher duties payment where an employee is engaged for more than four hours during the day on duties carrying a higher minimum wage. Clause 24.3 deals with the ordinary hours of work for a day worker. They may be worked between the hours of 5am and 5pm, with a provision to alter those hours by one hour at other end. Overtime is dealt with in clause 26. All work done outside of ordinary hours is to be paid at 150% for the first three hours and 200% thereafter. An employee required to work overtime on a public holiday is to be paid for a minimum of four hours at the rate of 250%.

[31] I refer briefly to the provisions of the Seafood Processing Award. Like the other two awards, a casual is to be paid the ordinary hourly rate together with a loading of 25%. Under clause 12.3, an employer is obliged to inform the employee of, amongst other things, their classification level and rate of pay and the likely number of hours required. Clause 15.2 deals with “Higher Duties” and provides that, where an employee is engaged for more than two hours on duties carrying a higher minimum wage, they are to be paid that higher wage for the day.

[32] Clause 23 deals with ordinary hours of work and provides that any work performed outside the spread of ordinary hours is to be paid at overtime rates. Overtime is dealt with at clause 26. Subject to some provisions to which I need not refer, all work done outside ordinary hours is to be paid at 150% for the first three hours and 200% thereafter.

The evidence

[33] I now refer to the evidence called by the employer. Three witnesses were called, each of whom had filed a statement. The first witness was Ms Xiuyan Chen. The witness statement tendered in evidence was in English; however, she relied on a version which had been translated into Mandarin. Ms Chen gave her evidence through a Mandarin-speaking interpreter. Ms Chen was an employee bargaining representative for both herself and some other employees and was a signatory to the Agreement. She worked as a Packer at the premises of one of the employer’s clients, B. E. Campbell Pty Ltd.

[34] Ms Chen said that representatives of the employer had met with employees and advised that the employer wanted to negotiate an enterprise agreement. That was in early August and the employees had been asked if they had any “issue with our arrangement”. The employees had said they had no issue. 10 The employer representatives again visited in September. Employees were told that the main change in the enterprise agreement was to allow employees who want to volunteer to work additional hours to do so. In that event, they would be paid for those hours at their normal rate of pay, not at overtime rates. Employees were told that they did not have to work the additional hours unless they put their name down on a list of volunteers. Shortly after that time, employee representatives handed out voting slips to employees and asked them to mark the slip either “yes” or “no” in favour of the Agreement. She said that all employees who voted for the Agreement voted for “the agreement to go through”.11

[35] I asked Ms Chen a number of questions. The first was for her to identify the classification level in the Agreement in which he was engaged. She identified level 16 which, in the Agreement, contains an ordinary hourly rate of $20.36. Ms Chen said that she received $20.09 per hour and no additional amount. She confirmed this sum when it was written down and shown to her. 12 She also confirmed she was engaged as a casual employee. Her evidence about payment was not revisited in re-examination.

[36] Ms Chen said she did not work fixed hours each week, but she did work Mondays to Fridays. She did not work on weekends. In the previous week, she had started work from 5am and worked to around 12 noon or 1pm. Sometimes she works from 5am to 10 or 11am. 13

[37] Ms Chen had been working at the premises of B.E. Campbell. She had been working there for two years.

[38] The next witness was Ms Jiong (Jane) Xue. She had completed the Form F17 and was described as a Manager. She said the employer had between 80 to 120 employees all engaged as casuals and all working in New South Wales. The employees are all visitors to Australia on s.417 visas. They are either Taiwanese or Korean. The employer expected to employ Chinese nationals coming into Australia on similar visas.

[39] Ms Xue explained that employees may only stay with a host employer for up to 6 months and then would need to move to another host employer. An exception to this is where employees work in rural areas and it seems they may work again for the same host employer in that rural area. Some employees are skilled in meat processing but most are new to the industry and need to be trained.

[40] Some employees have little interest in working additional hours. Others wish to do so. The hours employees work may differ from week to week and day to day depending on the time of the year and the clients for whom work is being undertaken. 14 Ms Xiu said that “so far” employees had not been required to work weekends.15

[41] Both the employer and Agribusiness Pty Ltd compete for the same meat processing company clients. They each compete for labour from the same pool of s.417 visa holders.

[42] The employer had developed a request form to implement the voluntary additional hours provisions contained in the Agreement. A copy of that draft request form was tendered. As the employer does not currently have a voluntary additional hours provision, employees of Agribusiness Pty Ltd are getting more hours from clients than the employer’s employees are being offered.

[43] Ms Xue was not asked about the accuracy of the hourly rate that Ms Chen had said she was paid. She did say however, when asked about how the employees were paid, that, as an example, the employer uses the casual rate for a Level 1 which is $21.09.

[44] The next witness called by the employer was Mr Todd Brooks, a consultant. He had worked in the meat industry for 18 years and had held a number of managerial positions within the meat industry.

[45] He had been an employee of Agribusiness Pty Ltd. He had raised with the employer the issue of voluntary additional hours similar to that in the Agribusiness Agreement. He addressed the peaks and troughs that are a feature of the meat processing industry. They in turn impacted on the number of hours employees in processing plants were required to work. Seasonality impacts the supply of livestock to the industry. For example, weather conditions impact on the availability of stock. He addressed market demand which drove the peaks and troughs and fluctuating demands at Christmas and Easter time. In his experience, these factors resulted in hours worked by casual employees fluctuating. His view was that voluntary additional hours would be attractive as they allow an employee to make up for any loss of time during quiet periods or when they are between jobs. He understands that some Agribusiness Pty Ltd employees may work for the same clients as Mondex employees.

[46] He said that employers in the industry will minimise the hours they have to pay at penalty rates so, with the s.417 employees, they will employ more of them rather than pay overtime. 16 He gave evidence about the various considerations that an employer will take into account when deciding on the manner in which it would roster employees, weighing the associated costs together with the potential overtime costs.17 Mr Brooks gave evidence about the processing costs in the Australian meat industry and compared those with the United States of America and Brazil.

Submissions

[47] Mr McMahon filed submissions principally addressing the reasons why I should be persuaded that, because of exceptional circumstances, approval of the Agreement would not be contrary to the public interest. In this respect, he relied on s.189 of the Act, which I have earlier reproduced.

[48] I have considered all of the submissions made on behalf of the employer. I refer to the key points.

● The approach to be taken to the expression “exceptional circumstances” should be that adopted by the Commission in Nulty v Blue Star Group Pty Ltd (Nulty). 18 The Full Bench was there considering the reference to exceptional circumstances in provisions of the Act concerning an extension of time for the filing of an unfair dismissal or general protections application. The expression "exceptional circumstances" is to be given its ordinary meaning and 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. Exceptional circumstances can include a single exceptional matter or a combination of factors which together may be seen as exceptional.

● At the time of filing the Agreement, the employer was supplying labour to undertake meat processing only. The employer may, in the future, provide labour hire employees to poultry and seafood processing clients. This is why the scope of the Agreement extends to these activities.

● The employees are “almost exclusively holders of subclass 417 visas” and employed as casuals. 19 The employer is one of the largest labour hire companies providing the type of service it does in Australia. It is submitted they are well known in Taiwan and Korea. If it were not for the employer, many s.417 visa holders would find it difficult to work in Australia.

● The workforce is generally short-term and tops up clients’ extra labour requirements in seasonal peaks and busy weeks. To provide these employees with an opportunity on a voluntary basis to improve their financial security would not be contrary to the public interest. If the employers were not able to access these voluntary additional hours, the alternative would be that they would be provided with fewer or no additional hours.

● The clients of the employer will try to avoid paying overtime completely due to its impact on their margins. The employer is competing with other companies and with Agribusiness Pty Ltd in particular in relation to the cost of the provision of labour to clients. That company sources the same labour pool of Taiwanese and Korean backpackers as the employer.

● The terms of the Agreement are substantially similar to the Agribusiness Agreement approved by the Commission.

● The most important exceptional circumstance is the peaks and troughs in workload due to seasonal factors. Seasonal factors have been taken into account and found to constitute exceptional circumstances by members of the Commission when deciding to approve or certify enterprise agreements. I address these decisions below.

Consideration

[49] It is not in issue that the Agreement does not pass the better off overall test. Enterprise agreements containing a clause variously described as a preferred hours clause or additional voluntary hours clause have been addressed in Commission decisions in the past. It is adequate for the purposes of this decision to refer to the Full Bench decision of Re MSA Security Officers Certified Agreement 2003 (MSA Security). 20 Although the consideration there was whether the relevant agreement passed the then no-disadvantage test (NDT), the observations made remain relevant. The decision concerned an appeal against the certification of an agreement which contained a term providing for the parties to agree that extra hours or shifts could be paid at ordinary time rates of pay rather than overtime rates. The Full Bench said that, in applying the NDT, consideration is to be given to a comparison between the enterprise agreement terms and the relevant award terms. The award did not distinguish between hours worked on a voluntary basis or those as directed by an employer. All such hours were to be paid for at the applicable overtime rates. The application of the NDT did not involve an analysis of matters or considerations other than those between the enterprise agreement and the comparable terms and conditions of the award. It was not to the point that if employees had to be paid at overtime rates the employer may not offer them additional hours.

[50] MSA Security was applied and approved in the Full Bench decision of BUPA Care Services Pty Ltd. 21 The enterprise agreement there under consideration contained a preferred hours clause which provided for an employee to request to work overtime and, in that event, those hours would be paid at the ordinary hourly rate. The Full Bench found that the agreement did not pass the NDT.

[51] Mr McMahon submitted that, despite the Agreement failing the better off overall test, it should nonetheless be approved. He relied on a number of decisions of single members of the Commission approving or certifying enterprise agreements which, in his submission, were relevant to this application.

[52] I refer first to the Samphie Pty Ltd t/a Black Crow Organics decision. 22 That decision concerned an application for approval of an enterprise agreement in the agricultural industry. Deputy President Asbury approved the agreement being satisfied that exceptional circumstances existed such as to warrant that approval. The agreement contained a voluntary hours clause. Mr McMahon referred only to paragraph [26] of the approval decision where she said she was satisfied there were exceptional circumstances which were associated with the fact the employer was in a seasonal industry and subject to peaks and troughs in workload. This had an effect on “regular casual employees” as the hours available for them to work fluctuated. Importantly, I note the Deputy President observed that the agreement had been made at a time when the previous Workplace Authority had promulgated and approved such arrangements. Subsequently, at paragraph [21], she made general observations about the approach to applying the NDT test which remain valid in relation to the application of the better off overall test. I note in particular the following comments:

“[21] There is nothing in that decision to indicate any change to the longstanding approach with respect to the application of the no-disadvantage test. Essentially, that approach is that the no-disadvantage test is applied on a global, rather than a line by line basis. Thus an agreement provision which considered alone may be less beneficial to an employee when compared with an equivalent provision in a relevant reference instrument, will not result in the agreement failing the no-disadvantage test, if there are other more beneficial provisions in the agreement, which on balance, offset the less beneficial provision. For example, an agreement which provides for employees to be paid a flat hourly rate for all hours worked, may not disadvantage those employees if the flat hourly rate is higher than the base rate in the relevant reference instrument. The payment of a loaded rate for all hours worked is an advantage that may offset the disadvantage associated with the entitlement of the employee under a reference instrument to be paid overtime rates for some hours worked. It may also be relevant for the purposes of the no-disadvantage test that a flat hourly rate feeds into leave entitlements under an agreement, so that those entitlements are paid in a way that is more beneficial than the terms of the relevant reference instrument.

[22] The decision in Bupa does make it clear however, that the application of the no-disadvantage test does not involve an analysis of matters other than the terms and conditions of the enterprise agreement, against those in any relevant reference instrument, and the effect that the terms and conditions may have on the actions of the employer or employees, is not relevant. Thus it is not relevant to the application of the no-disadvantage test that the employee may prefer to work at particular times. It is also not relevant that if the employer would be required to pay overtime rates for particular hours, the employer would not have scheduled work to be done during those hours, or that the employer would have allocated the hours among additional employees, so that no employees would have been entitled to overtime payments”.

[53] The Deputy President went on to observe at paragraph [27]:

“[27] The agreements approved under the current Act were approved on the basis that they passed the no-disadvantage test, and were generally approved prior to the Full Bench Decision in Bupa. Approval of the Agreement pursuant to s. 189 will result in the Agreement having a nominal expiry date of two years from the date of approval by virtue of subsection (4) of that section, rather than the four year term as provided in the Agreement. The approval of the Agreement will allow the employer and the employees to transition to the Modern Award over that two year period. In all of the circumstances, approval of the Agreement would not be contrary to the public interest”.

[54] I am not persuaded that this decision provides a precedent I should follow in this case. Firstly, it is a decision of a single member, not of a Full Bench. I do agree however with the reasons given in respect of the proper application of the NDT which are also applicable to the better off overall test. Importantly, it is clear that the Deputy President was prepared to approve the enterprise agreement on the basis that it would allow the employer and employees to “transition to the modern award” over a two year period. In this case, the Meat Industry Award, like all other modern awards, came into operation on 1 January 2010, three years prior to the employer commencing its operation. Furthermore, there is nothing in the Agreement which provides any enhancement of the hourly rate to be paid to employees. The amount is “line ball” with the relevant Meat Industry Award and the other two modern awards. There is nothing in the Agreement which is more beneficial to employees than in those modern awards. As I later observe, there are a number of provisions that appear to be less beneficial.

[55] I note that in the Full Bench decision in the Modern Awards Review 2012 - Award Flexibility, 23 the issue of the application of the better off overall test to an agreement containing a voluntary hours provision was discussed. Although that Full Bench was considering the terms of a model flexibility clause for modern awards, it endorsed the approach that was taken by Deputy President Asbury and said that, to be approved, an enterprise agreement containing a preferred hours clause would need to contain a corresponding benefit/s that outweighed the detriment of the preferred hours arrangement in order to meet the requirements of the better off overall test.

[56] Next, Mr McMahon referred to a decision of Deputy President Bartel in Top End Consulting Pty Ltd. 24 That concerned an application for an approval of an enterprise agreement covering an employer that provided labour hire employees to industries in Northern Territory and Western Australia. The agreement had a voluntary hours provision in it. The Deputy President ruled that the agreement did not pass the better off overall test. She then turned to whether it should be approved under s.189 of the Act. She found that there were exceptional circumstances, being the profile of the employees, the provision of labour to seasonal industries (as opposed to the provision of labour to cover the regular peaks and troughs of activity that occurs in many businesses) and the employer’s business operating predominantly within the tropical areas.25 I note that the seasonality observations referred to the peak seasons for mangoes, identified as being between the months of October and December, when there were many hours available for employees whereas outside this period there was little work available. She also identified a cafe in Kununurra which was open only 6 months of the year, coinciding with the peak season for agriculture in the region. It was about these businesses that she found seasonal considerations were such as to establish exceptional circumstances. In her decision, she made clear that she did not think exceptional circumstances were those reflecting the normal peaks and troughs in business activity. She required an undertaking that the ability to work voluntary hours would apply only to those industries that she identified as being seasonal. 26

[57] I am not persuaded that the above decision is on all fours with the facts in this matter. Other than referencing abattoirs which may have an annual shut down, Mr McMahon did not establish that there were weeks when no hours of work were available to employees. What the evidence suggested was there were times when hours additional to those worked in other weeks may be available to be worked. I also note that Deputy President Bartel said regular peaks and troughs did not constitute exceptional circumstances. This observation does not support the submissions made by the employer in this matter, relying, as it does, on the peaks and troughs in the meat industry.

[58] Mr McMahon also referred to other agreements which had been approved under s.189 of the Act. I have considered each of those decisions and do not propose to refer to them in any detail. It is to be noted, however, that each of them operated in the agricultural industry and considerations peculiar to sectors of that industry were taken into account. Each of them was approved in 2010 or 2011 at a time when there had previously been a widespread practice of employers having agreements containing voluntary overtime hours approved by the Workplace Authority. It would appear that the agreements operated predominately in Queensland. I also note comments made by Commission members approving them under s.189 that the two year period of operation would allow the employer and its employees to transition to the modern award placing them on the same basis as a significant number of other employers in the Queensland agricultural industry. 27

[59] Little or no weight was given by the employer to the comments made in the above decisions that the agreements were being approved under s.189 so as to allow the employer a chance to transition to the provisions of the relevant modern award/s. The decisions do not suggest a further enterprise agreement with similar terms would be approved under the exceptional circumstances provision; in fact they suggest the contrary.

[60] I am not able to comment on the reasons why approval of the Agribusiness Agreement was given. I note the Deputy President found that because of exceptional circumstances it would not be contrary to the public interest to approve it. No further reasons were given for that finding. 28 I do not know if the circumstances there found to warrant the approval of that agreement could be said to be comparable to those here relied on by the employer. In any event, the submissions and evidence in this matter do not persuade me to approve the Agreement.

[61] Finally, Mr McMahon relied on a decision approving an enterprise agreement in the meat industry under s.189 of the Act. That agreement was also made in 2010. It is known as the Metro Velda Peterborough Enterprise Agreement 2009.  29 The decision to approve it was on the basis that Deputy President Sams accepted the submissions of Metro Velda and the relevant union that it was in the public interest to ensure the continuation of processing and export of horsemeat from the employer’s factory in Peterborough in the state of South Australia. This would also allow the ongoing employment of its employees in Peterborough. That decision is distinguishable to the facts in this matter. I acknowledge that s.189(3) is an example only of circumstances which may be found to be exceptional, however this decision is consistent with the type of agreement envisaged by s.189(3) of the Act.

[62] I earlier referred to the employer’s submission that the approach I should take to the expression “exceptional circumstances” should be that taken by the Commission when considering whether an extension of time should be granted in unfair dismissal and general protections applications. This is not the occasion to deal comprehensively with this submission. It was not developed by the employer and I did not have the benefit of submissions from any other person or party. However, I can make two comments about the submission. The first is that where the expression is used in ss.366(2) and 394(3), the Commission is directed to take a number of specified factors into account when reaching a decision on whether it is satisfied exceptional circumstances exist.  None of those factors would seem to be applicable to the application of the term as it is used in s.189. Secondly, the circumstances here relied on by the employer do not in fact appear to be out of the ordinary course,  unusual,  special or uncommon. Rather, they seem to be reflective of common attributes of some sectors of the meat industry which are regularly and routinely encountered.

[63] I turn to make some comments about the facts in this matter. At the time of the hearing before me the employer was engaging labour only in “abattoirs and boning rooms in Junee, Gosford, Young and South western Sydney.” 30 Despite this, the Agreement is proposed to cover any employees throughout Australia with the exception of the ACT. No evidence or submissions persuaded me that it would be appropriate that the Agreement should extend beyond the current activities undertaken by the employer. Had I been persuaded that there were exceptional circumstances, it was likely that I would find it would be contrary to the public interest to approve it extending its inferior provisions to future employees who may be engaged by the employer throughout Australia.

[64] The evidence led from the witnesses does not satisfy me that exceptional circumstances exist such as to warrant the approval of the Agreement. Unfortunately, the evidence suggests the employer may not have been paying the Meat Industry Award rates. Certainly this is the effect of the evidence given by Ms Chen and it is to be recalled that she was an employee bargaining representative. She believed she was on the highest level being Level 16. The casual hourly rate for that classification is $25.45 an hour. The lowest classification level for a packer in the Meat Industry Award would appear to be Level 3 which has a casual hourly rate of $22.10. The only amount Ms Xiu referred to was the rate for a Level 1 casual which, in the Meat Industry Award and the Agreement, is $21.09. I note from Schedule B of this award that the Level 1 classification is for a person with no experience in the industry in on the job training for an initial period of at least three months. It is unlikely that would be an accurate classification for Ms Chen who has been employed for 2 years.

[65] I have considered the employer’s submission that seasonality of supply of the product was the principal reason constituting exceptional circumstances. 31 I had no evidence that there were lengthy periods of time when little or no work was available. I acknowledge that shut downs of export abattoirs was referred to as an example of actions that are taken in the industry to accommodate the seasonal fluctuations, but there was no suggestion the employer shut down its business or ceased to operate for any period of time. I accept that hours available to casual employees will fluctuate but this does not constitute an exceptional circumstance. It is a fact of life in the meat processing industry. It will occur when, for example, there is more product to be processed than at other times or there is a greater demand for a type of product. In these circumstances the employer is able (and I assume already does) roster additional casual employees in a manner so as to minimise the need for payment of overtime.

[66] I am not persuaded that the Agribusiness Agreement constitutes an exceptional circumstance. 32 It was suggested the existence of that agreement may have an adverse impact on the ongoing viability of the employer. Much more would need to be established for me to consider whether such a submission may be relevant. There may be many reasons other than the agreement as to why Agribusiness Pty Ltd may win contracts in preference to the employer. If the employer has any reason to believe, as seems to be suggested, that the Agribusiness Agreement is not being complied with, then it or an employee covered by that agreement should take those concerns to the relevant agency. The suggestion about potential negative impact on the employer is difficult to reconcile with the description of Mondex being “one of the largest labour hire companies providing this service”.33 Nor does it fit with the employer’s intention to expand into the provision of labour hire employees to the industries covered by the Poultry Processing Award and the Seafood Processing Award.

[67] Finally, I should indicate that, apart from the manner in which the Agreement is drafted, a number of its provisions are such that, in my opinion, to approve it would be contrary to the public interest. In this respect I have already referred at paragraph [9] to clauses 7 and 19 of the Agreement. I have referred at paragraph [17] to the terms of clause 14.2 and what is encompassed by the reference to allowances. Clause 6.2 provides for a period of 6 months probation and it is unclear why such a lengthy period is justified. The Agreement does not seem to provide for a higher duties payment. Additionally, it is quite unclear what is meant by the reference in Appendix A to the voluntary hours provisions only being available to employees “who can establish a genuine need”.

[68] The employer's submissions and evidence addressed the reasons why I should be persuaded there are exceptional circumstances and that it would not be contrary to the public interest to approve the Agreement. It confined its submissions to s.189 of the Act. After the hearing, and when I had reserved my decision, the employer sent an email indicating that it had considered the terms of the Agreement and the provisions of clauses 11 and 16 in particular. It indicated that it would be prepared to provide an undertaking pursuant to s.190 of the Act. The undertaking was that any employee working on a weekend would be paid the penalty rates provided for in the relevant modern awards. This was the first time the matter of undertakings was raised. As is apparent from my reasons the case was run on the basis I should approve the Agreement under s.189(2) of the Act and most consideration was given to the provisions relating to the hourly rate to be paid for overtime hours. It was not suggested that, if I had concerns about the hourly rate to be paid for overtime then, pursuant to s.190 of the Act, the employer would provide an undertaking. I do not think it necessary for me to consider further the terms of the email. In any event, it is unlikely I would have accepted undertakings given pursuant to s.190 of the Act. I have too many concerns about the Agreement and the undertakings that may be necessary to meet those concerns would, in my opinion, result in substantial changes to it.

[69] The application for approval of the Agreement is refused.

SENIOR DEPUTY PRESIDENT

 1   Form F17 answer to question 4.1.

 2   The manner in which that test is to be applied is provided for in s.193 of the Act.

 3   [2013] FWCA 6970.

 4   See answer to question 3.2 in the Form F17.

 5   MA000059.

 6   MA000074.

 7   MA000068.

 8   See for example PN228.

 9   Clause 13.2.

 10   Exhibit Mondex 2, paragraph.4.

 11   Exhibit Mondex 2, paragraph 7, but see the Form F17 which indicates that 61 of the 94 employees who cast a valid vote did so in favour of the Agreement.

 12   PN72-PN80.

 13   PN 84 - PN96.

 14   PN160-PN172.

 15   PN212, PN316, PN322.

 16   PN255.

 17   PN276.

 18   (2011) FWAFB 975.

 19   Exhibit Mondex 1, paragraph.7.

 20   PR 937654.

 21   [2010] FWAFB 2762.

 22   [2010] FWAA 5060.

 23   [2013] FWCFB 2170.

 24   [2010] FWA 6442.

 25   Ibid at [43].

 26   Ibid at [8]-[12] and [47].

 27   [2010] FWAA 9849 at [15], [2011] FWAA 1779 at [8].

 28   [2013] FWCA 6970.

 29   [2010] FWAA 2622.

 30   Exhibit Mondex 1, paragraph 9.

 31   PN306

 32   PN344 They can supply labour more cheaply

 33   Exhibit Mondex 1 para.9

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