[2015] FWC 7101

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

Costa Exchange Pty Ltd T/A Costa (Berry Category)
(AG2015/4434)

SENIOR DEPUTY PRESIDENT HAMBERGER

SYDNEY, 12 NOVEMBER 2015

Application for approval of the Costa (Berry Category) Enterprise Agreement 2015-2019 – agreement not approved.

[1] Costa Exchange Pty Ltd (Costa) applied on 25 August 2015 for approval of the Costa (Berry Category) Enterprise Agreement 2015-2019 (the Agreement) pursuant to s. 185 of the Fair Work Act 2009 (the FW Act). The Agreement would replace the Berry Exchange Enterprise Agreement 2011-2015 1 (the 2011 Agreement), which was approved by the Commission on 30 June 2011. There are a large number of employees that would be covered by the Agreement, in a wide range of locations across Australia.

[2] On 3 September 2015, the National Union of Workers (NUW) filed a statutory declaration indicating, in summary, that it did not believe the Commission could be satisfied that the requirements of s.186(2)(a) (that the agreement was genuinely agreed to by employees) and s.186(2)(d) (the better off overall test - the BOOT) are met in relation to the Agreement.

[3] Directions were issued on 4 September 2015 for interested parties to file an outline of submissions and statements of evidence concerning the application and a hearing was conducted in Melbourne on 1 October 2015. At the hearing, Costa was represented by Mr J D’Abaco (of counsel), and the NUW by Ms A Wyrick (Industrial Officer). Evidence was given on behalf of Costa by:

● Ms F Bell (Human Resources Manager); and
● Mr C Phillips (Human Resources Operations Manager).

[4] Evidence was given on behalf of the NUW by Ms J Zaccaria (employed by Costa as a seasonal worker at Corindi, NSW).

[5] I will deal with the two issues – whether the employees have genuinely agreed to the agreement, and whether the agreement passes the BOOT – in turn.

Whether the Agreement Has Been Genuinely Agreed to by the Employees

[6] Section 188 of the FW Act provides as follows:

‘188 When employees have genuinely agreed to an enterprise agreement

An enterprise agreement has been genuinely agreed to by the employees covered by the agreement if the FWC is satisfied that:

(a) the employer, or each of the employers, covered by the agreement complied with the following provisions in relation to the agreement:

(i) subsections 180(2), (3) and (5) (which deal with pre approval steps);

(ii) subsection 181(2) (which requires that employees not be requested to approve an enterprise agreement until 21 days after the last notice of employee representational rights is given); and

(b) the agreement was made in accordance with whichever of subsection 182(1) or (2) applies (those subsections deal with the making of different kinds of enterprise agreements by employee vote); and

(c) there are no other reasonable grounds for believing that the agreement has not been genuinely agreed to by the employees.’

[7] The NUW takes no issue with whether with the requirements of s.181(2) were met. Subsections 180(2), (3), (4), (5) and (6) are as follows:

‘Employees must be given copy of the agreement etc.

(2) The employer must take all reasonable steps to ensure that:

(a) during the access period for the agreement, the employees (the relevant employees) employed at the time who will be covered by the agreement are given a copy of the following materials:

(i) the written text of the agreement;

(ii) any other material incorporated by reference in the agreement; or

(b) the relevant employees have access, throughout the access period for the agreement, to a copy of those materials.

(3) The employer must take all reasonable steps to notify the relevant employees of the following by the start of the access period for the agreement:

(a) the time and place at which the vote will occur;

(b) the voting method that will be used.

(4) The access period for a proposed enterprise agreement is the 7-day period ending immediately before the start of the voting process referred to in subsection 181(1).

Terms of the agreement must be explained to employees etc.

(5) The employer must take all reasonable steps to ensure that:

(a) the terms of the agreement, and the effect of those terms, are explained to the relevant employees; and

(b) the explanation is provided in an appropriate manner taking into account the particular circumstances and needs of the relevant employees.

(6) Without limiting paragraph (5)(b), the following are examples of the kinds of employees whose circumstances and needs are to be taken into account for the purposes of complying with that paragraph:

(a) employees from culturally and linguistically diverse backgrounds;

(b) young employees;

[8] The NUW submitted that Costa had failed to take all reasonable steps to ensure that, during the access period for the Agreement, employees had a copy of, or had access to material incorporated by reference in the Agreement. In particular, it said that employees were not given a copy of, nor had access to:

● the NES;
● the Long Service Leave Acts relevant to the States in which the proposed agreement would apply;
● the Horticulture Award 2010 2 (the Horticulture Award); and
● the Company Clothing policy.

[9] I do not consider that any of this material was incorporated by reference in the Agreement. The references in the Agreement to the NES and State long service leave legislation are merely indications that those provisions apply as a matter of law. The reference to the Company Clothing policy is at Clause 22.4. It states that ‘The Company clothing policy will apply.’ This does no more than draw the employees’ attention to the application of the Clothing Policy. This does not indicate that the policy has been incorporated into the Agreement.

[10] The NUW also submitted that, when explaining the terms of the proposed agreement and the effect of those terms to the relevant employees, Costa failed to take account the particular circumstances and needs of the relevant employees. The NUW also alleged that employees were misinformed about the content of the proposed agreement and the process surrounding the agreement.

[11] Ms Bell, in her statement, 3 gave extensive evidence about the process used to explain the terms of the proposed agreement and the effect of those terms, in all the locations where there are employees who would be covered by the Agreement. This included a PowerPoint presentation outlining the history of the Agreement, the key provisions of the Agreement, and information about the approval process. Employees were told in this presentation that they had an opportunity to review the Agreement and ask questions about it. The presentation indicated that copies of the Agreement would be available in a range of languages. Employees were directed to speak to their local manager if they had questions about the Agreement. There was also a more detailed information document, which, inter alia, provided a comparison with the 2011 Agreement. Again, employees were encouraged to seek further information or explanation from their manager or Ms Bell herself. Ms Bell gave evidence about how these documents were distributed by local managers at all the various worksites that would be covered by the Agreement. Managers generally held meetings with their employees, and interpreters were used where necessary. The documents were made available in a range of different languages, including Burmese, Mandarin and Afghani.

[12] Ms Zaccaria gave evidence that on or around the first week in August 2015, a Costa representative came to her work site and explained the Agreement. ‘He talked about the changes made to the agreement and had documents with him and said we could read them.’ 4 She indicated that another representative came a couple of days later to speak to some new employees who had commenced work in her crew and gave them the same information. She stayed and listened to this further explanation. She understood that she could take a copy of the Agreement and read it during her break, which she did. Her evidence is consistent with that given by Costa.

[13] Ms Zaccaria commented:

‘The agreement itself was not clear. What it was offering was not clear to me. The agreement did not address casuals or contain the words punnets or kilos. I could not find changes in the agreement that addressed piece rate workers.’ 5

[14] Ms Zaccaria expressed her opinion that many of the workers she had met at Costa were not aware of their rights and did not speak or understand English well. ‘They do not understand this process of making an agreement or how it will impact them’. 6

[15] Enterprise agreements are by their very nature relatively complex documents. Given this inherent complexity, the Agreement and the explanatory material provided by Costa are reasonably clear. It is possible that some employees had difficulties understanding some aspects of the Agreement. However, I am satisfied that Costa took all reasonable steps to explain the terms of the proposed agreement and the effect of those terms to the relevant employees. I have borne in mind, in making this assessment, that there is already an enterprise agreement in place (the 2011 Agreement), which the Agreement would replace, if approved. Thus, in explaining the effect of the Agreement for the employees, it is more important to compare the new Agreement to the 2011 Agreement (rather than the Modern Award that would apply if there were no enterprise agreement in place). I am also satisfied that, in explaining the effect of the Agreement, Costa took into account the particular circumstances and needs of the employees. In particular they had due regard to the language background of many of their employees.

[16] The explanatory material, read literally, indicated that the Agreement (inter alia) contained the ‘Costa Berry Workplace Guidelines’. This is a supplementary document which refers to:

● A training program to support the Agreement’s implementation;
● Costa’s approach to offering permanent roles to casual employees;
● An explanation of how the classification structure in the Agreement compares to that in the Horticulture Award; and
● Details about the provision of wet weather clothing.

[17] This document does not form part of the Agreement, but in effect supplements the Agreement. While it would have been preferable if this had been made clear, I do not consider that this error undermines the genuine consent of the employees to the Agreement.

[18] In conclusion, I am satisfied that the employees genuinely agreed to the Agreement.

Whether the Agreement meets the BOOT

[19] Section 193 of the FW Act relevantly provides:

“193 Passing the better off overall test

When a non greenfields agreement passes the better off overall test

(1) An enterprise agreement that is not a greenfields agreement passes the better off overall test under this section if the FWC is satisfied, as at the test time, that each award covered employee, and each prospective award covered employee, for the agreement would be better off overall if the agreement applied to the employee than if the relevant modern award applied to the employee.

…

Award covered employee

(4) An award covered employee for an enterprise agreement is an employee who:

(a) is covered by the agreement; and

(b) at the test time, is covered by a modern award (the relevant modern award) that:

(i) is in operation; and

(ii) covers the employee in relation to the work that he or she is to perform under the agreement; and

(iii) covers his or her employer.

Prospective award covered employee

(5) A prospective award covered employee for an enterprise agreement is a person who, if he or she were an employee at the test time of an employer covered by the agreement:

(a) would be covered by the agreement; and

(b) would be covered by a modern award (the relevant modern award) that:

(i) is in operation; and

(ii) would cover the person in relation to the work that he or she would perform under the agreement; and

(iii) covers the employer.

Test time

(6) The test time is the time the application for approval of the agreement by the FWC was made under section 185.

FWC may assume employee better off overall in certain circumstances

(7) For the purposes of determining whether an enterprise agreement passes the better off overall test, if a class of employees to which a particular employee belongs would be better off if the agreement applied to that class than if the relevant modern award applied to that class, the FWC is entitled to assume, in the absence of evidence to the contrary, that the employee would be better off overall if the agreement applied to the employee.”

[20] The bulk of the employees that would be covered by the Agreement are covered by the Horticulture Award. A small number of employees are covered by the Clerks Private Sector Award 2010 7 (the Clerks Award) and the Manufacturing and Associated Industries and Occupations Award 20108 (the Manufacturing Award).

[21] The Agreement contains some provisions that are more beneficial than those in the relevant awards and others that are less beneficial. The NUW’s submissions only related to the Horticulture Award. It drew attention to a range of provisions in the Agreement that it said were deficient when compared to that award. It submitted that any ‘above award provisions’ did not outweigh those deficiencies, with the result that the employees would not be better off overall than under that award.

[22] The NUW also submitted that the Agreement was inconsistent with the provisions of s.198 of the FW Act. That section provides:

‘198 Pieceworkers—enterprise agreement does not include a pieceworker term

Application of this section

(1) This section applies if:

(a) an enterprise agreement that covers an employee does not include a term that defines or describes the employee as a pieceworker; and

(b) a modern award that is in operation and covers the employee includes such a term.

No detriment test

(2) The FWC must be satisfied that the effect of not including such a term in the agreement is not detrimental to the employee in relation to the entitlements of the employee under the National Employment Standards.’

[23] I consider this latter submission misconceived. The Horticulture Award includes a pieceworker term. So does the Agreement.

[24] I am satisfied that the rates of pay contained in the Agreement are generally well above those in the relevant awards, though the Agreement does not include some allowances that are contained for example in the Horticulture Award. All hours are paid at the same rate (leaving aside for now the issue of piece rates). Thus, there are no loadings for overtime or public holidays etc. There are also no provisions for meal breaks or rest breaks. No annual leave loading is payable.

[25] I note that the ordinary hours provisions in the Horticulture Award do not apply to casual employees (who comprise the vast majority of employees that would be covered by the Agreement). This is reflected in the Agreement. I also note that casual employees under the Agreement receive a 30% loading rather than the 25% loading provided by the Horticulture award. The Agreement contains a provision that permanent employees are to receive an additional weekly payment of $100 per week.

[26] Attached to Mr Phillips’ statement 9 were a series of spreadsheets that contained detailed calculations based on what a randomly selected range of employees working in different classifications would earn under the Agreement based on the hours they worked in the preceding twelve month period, compared to what they would earn if they were paid in accordance with the relevant award.10 No real challenge was made to the accuracy of these spreadsheets, and I accept their accuracy (subject to the qualifications referred to below). They show, in summary that a casual administrative employee would have been $487.24 (or about 4%) better off under the Agreement; a casual employed in the workshop would have been $1,051.94 (or about 2%) worse off, a permanent employed in the workshop would have been $9,225.46 (or about 20%) better off, a casual employed in ‘raspberry maintenance’ would have been $675.71 (or about 3.5%) better off, a permanent employed in ‘blueberry maintenance’ would have been $12,547 (or about 32%) better off, a supervisor in ‘blueberry maintenance’ would have been $6,609.73 (or about 13%) better off, a casual pruner would have been $1,813.94 (or about 4%) better off, a permanent pruner $9,273.63 (or about 20%) better off, a casual employed in ‘blueberry maintenance’ would have been $1,771.77 (or about 5%) better off, a casual packer would have been $1,349.17 (or about 5%) better off, a casual raspberry picker would have been $7,761.98 (or about 19%) better off, and a casual blueberry picker $4,630.68 (or about 19%) better off.

[27] With regard to the workshop casual Mr Phillips gave evidence that if the employee worked a 38-hour week they would be ‘in front, but because the employee works overtime, as per the modelling, then they are behind’. 11

[28] As noted, both the Horticulture Award and the Agreement contain provisions for piecework. While they are expressed somewhat differently they are in effect very similar. Under both the Agreement and the Horticulture Award piecework rates are fixed at rates that will enable the ‘average, competent employee’ to earn at least 15% more per hour than they would earn under the hourly rate of pay for the applicable classification (including the casual loading, where applicable). Some of Ms Zaccaria’s evidence was to the effect that some employees struggled to achieve this figure. Even if that were true (and the evidence was insufficient to make such a finding), that is not relevant to the BOOT (though it might be relevant to the issue of whether Costa was complying with the Agreement, noting of course that neither the Agreement nor the Horticulture Award guarantee that all pieceworkers will earn at least the award hourly rate). 12

[29] I do have some concerns about whether the Agreement passes the BOOT. First, based on Mr Phillips’s evidence, it appears that casuals employed in the workshop may earn less than they would under the award – at least if they work overtime. Secondly, I am concerned about the Agreement’s failure to contain any provisions about meal or rest breaks. Thirdly, the Agreement does not contain any of the allowances provided for in clause 17 of the award (apart from a leading hand allowance).

Conclusion

[30] I consider it appropriate to provide Costa with an opportunity to provide the Commission with undertakings to satisfy the three concerns I have referred to above (in accordance with s.190 of the FW Act).

[31] I will reconsider whether the Agreement should be approved once I have received any such undertakings (and given the other bargaining representatives an opportunity to provide their views about those undertakings).