[2015] FWCFB 6059
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.

Viterra Pty Ltd
v
Australian Workers’ Union and Maritime Union of Australia
(EM2013/63)

SENIOR DEPUTY PRESIDENT HARRISON
DEPUTY PRESIDENT SAMS
COMMISSIONER CAMBRIDGE

SYDNEY, 14 SEPTEMBER 2015

Application to make a modern enterprise award to replace the Bulk Handling of Grain Award [AN150024] - Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 schedule 6 - Fair Work Act 2009 ss. 134, 284 - application granted - modern enterprise award will be made.

[1] This decision concerns an application by Viterra Pty Ltd (Viterra or the applicant) for a modern enterprise award to be made which would replace the Bulk Handling of Grain Award (BHG Award).  1 The application is made under item 4 of schedule 6 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) (the Transitional Act).

[2] Ausbulk Ltd, which has since been taken over by the applicant, 2 is the only employer respondent to the BHG Award. The only other party named is the Amalgamated AWU (S.A.) State Union. It was not in issue that the BHG Award is an enterprise instrument for the purposes of item 2 of Schedule 6 and covers employees in a single enterprise or part of a single enterprise as those terms are defined in item 3 of Schedule 6.

[3] In the hearing before us, Mr Short appeared for Viterra. Ms Gherjestani appeared for The Australian Workers’ Union (AWU) and Mr Keats for the Maritime Union of Australia (MUA). Permission to appear was granted to both Mr Short and Mr Keats. No other union made any written submissions nor appeared at the hearing.

[4] Witness evidence was given on behalf of Viterra by Mr Benjamin Norman, Director Human Resources, Australia and New Zealand. Two witness statements of Mr Norman were filed and he was called to give brief evidence. He was cross-examined by the MUA in relation to three discrete matters; part-time provisions in the proposed award, the coverage of employees at bulk loading plants and Port terminals and the existence of enterprise agreements covering employees who are covered by the BHG Award. There is no need for us to make any findings about any contentious evidence; we accept his evidence. We do not propose to summarise it here. It is sufficient however to indicate that it was detailed and comprehensive. It covered the nature of Viterra’s business and activities, industrial instruments covering it and its employees, its employment arrangements, key features of the grain handling industry and Viterra’s storage and handling system. Mr Norman also deposed to discussions with Viterra employees and their representatives about this application and the nature of the modern enterprise award which is sought. He also gave evidence about the consequences of a modern enterprise award not being made.

[5] Viterra filed written submissions including supplementary submissions. They were detailed and addressed each of the considerations to which item 4 of schedule 6 directs our attention. The submissions also addressed details of the discussions that had occurred from time to time with unions and identified compromises made as a result of those discussions. Numerous iterations of the terms of a draft modern enterprise award were filed reflecting the outcome of these meetings. We refer to the final draft of the modern enterprise award filed by the applicants as the proposed award. 3

[6] Written submissions were filed by the AWU and the MUA. Up until shortly before the hearing, the MUA was supportive of Viterra’s application. Due to a disagreement about the terms of the coverage clause of the modern enterprise award sought, the MUA withdrew its support. 4 In short, it seeks a “carve out” providing that a modern enterprise award does not cover employees covered by the Stevedoring Industry Award 2010.5 This was the key issue for the MUA although we have considered all of the matters raised in its written submission. By the time this matter proceeded to a hearing the application was supported by the AWU.

[7] We have decided to make a modern enterprise award. These are our reasons for that decision.

The legislative task

[8] We commence by noting that other than modern enterprise awards made under schedule 6 of the Transitional Act, no new enterprise awards will be made. This is the effect of s.168C of the Fair Work Act 2009 (Cth) (the Act), which is contained within Part 2-3—Modern awards. It provides that the Fair Work Commission (the Commission) must not, under that Part, make a modern enterprise award or vary an award so that it becomes a modern enterprise award. There is no other Part of the Act under which a modern enterprise award may be made.

[9] The approach to be taken by the Commission when deciding whether to make a modern enterprise award and, if so, the terms of that award, is governed by several items of Schedule 6. The first is item 4(5), which provides:

[10] Item 6 of schedule 6 provides that the modern awards objective 6 and the minimum wages objective7 apply to the making of a modern enterprise award. We must also consider the modern enterprise awards objective which is set out in item 6(2) of Schedule 6. That requires the Commission to “recognise that modern enterprise awards may provide terms and conditions tailored to reflect employment arrangements that have been developed in relation to the relevant enterprises”.

[11] In the decision in Coleambally Irrigation Co-operative Limited v The Australian Workers’ Union & Ors 8 (Coleambally), the Commission referred to relevant extracts of Federal Court of Australia judgments in which the provisions of schedule 6 were considered.9 They were of a single judge and that of a Full Court on appeal. Both are titled Yum! Restaurants Australia Pty Ltd v Full Bench of Fair Work Australia (Yum Restaurants).10 We acknowledge that the extracts set out the approach we should take to the relevant items in schedule 6. We also note the more recent Federal Court judgment in CSR Limited v CSR & Holcim Staff Association.11 The Full Court there also considered the provisions of schedule 6. That judgment does not require us to revisit the correctness of the extracts taken from Yum Restaurants, but serves to remind us of the need to consider the modern awards objective in deciding whether to make an enterprise award and, if we do so, the terms of such an award.

[12] We are also required to consider item 7(1) of schedule 6. It relevantly provides that Division 3 of Part 2-3 of the Act applies to a modern enterprise award which may be made. Sections of the Act in that Division deal with terms which either may, or must, be in modern awards.

[13] We now turn to consider each of the matters in item 4(5). We indicate that some of the considerations addressed under one item are also relevant considerations under other items.

The circumstances that led to the making of the BHG Award rather than an instrument of more general application: item 4(5)(a)

[14] The origins of the BHG Award appear to have been in an industrial agreement made between South Australian Co-operative Bulk Handling Limited (SACBH) and the AWU. The agreement came into operation in April 1960. In December 1963, the BHG Award was made by the Industrial Relations Commission of South Australia. It was made by consent between the parties. At that time, there was no other industrial award prescribing the terms and conditions of employment for persons involved in bulk handling of grain. 12

[15] The BHG Award has been varied from time to time however it remains “applicable to the same employer, union and employees” and contains terms reflecting industry-specific factors that “specifically suit the particular requirements of SACBH, then Ausbulk Ltd and now the applicant's business, and the industry.” 13 Considerations which have been taken into account when varying the award are the seasonal nature of the work and the hiring patterns, the variability and unpredictability of labour demands, the benefit of flexibility in hours worked and of employees being multiskilled.14

Whether there is a modern award (other than the miscellaneous modern award) that would, but for the BHG Award, cover the persons who are covered by the BHG Award…:item 4(5)(b)

[16] There is no specific grain handling industry modern award. In the process of making modern awards a Full Bench of the Australian Industrial Relations Commission (AIRC) made the following comments about the industry:

[17] In its subsequent decision making Stage 4 modern awards, the Full Bench noted that it had earlier commented that it did not intend to make an award for the grain handling industry. It confirmed that decision and no more was said about the industry. 16

[18] Viterra submitted that, but for the BHG Award, most employees engaged by the applicant would be covered by the Storage Services and Wholesale Award 2010 17 (Storage Award) given that the storage and handling of grain and other like substances are the predominant activities of the applicant.18 All employees currently employed in container and bunker operations located outside of South Australia who would otherwise fall under the BHG Award are covered by the Storage Award.19

[19] The Stevedoring Industry Award 2010 20 (Stevedoring Industry Award) was the subject of submissions by the parties. We note that the stevedoring industry is defined in clause 3 of that award to mean the loading and unloading of cargo into or from a ship including its transporting and storage at or adjacent to a wharf. Viterra accepts that its employees engaged at bulk handling plants have been outside the coverage of the BHG Award and are covered by the Stevedoring Industry Award. Its proposed award will also exclude these employees. We accept Viterra’s submission that these employees are an organisationally distinct group of employees. An issue arose about the potential award coverage of employees classified as control room operators in the event a modern enterprise award was not made. It is clear from the terms of the BHG Award they have been expressly covered by that award and they would also be covered by the proposed award. Although the MUA does not expressly assert the Stevedoring Industry Award would cover control room operators if a modern enterprise award is not made, that possibility appears to be behind its submission that the Stevedoring Industry Award “may” so cover some employees otherwise under the BHG Award. We do not intend to make a finding on the potential “demarcation” issue however if it was necessary to do so we would prima facie accept Viterra’s submission that the control room operators would not be covered by the Stevedoring Industry Award but by the Storage Award.

[20] We should indicate that had we found that any employees covered by the BHG Award would be covered by the Stevedoring Industry Award in the event a modern enterprise award was not made, our conclusion in this matter would not have altered. We would have made a modern enterprise award with a coverage clause in the same terms we later decide upon.

The content, or likely content, of the modern award referred to in paragraph (b)…: item 4(5)(c)

[21] We have considered the terms of the Storage Award. The parties addressed the terms of that award and we were also provided with comparison tables in respect of a number of provisions of the BHG Award and the Storage Award. The Storage Award contains the standard provisions found in modern awards including provisions relating to the National Employment Standards, award flexibility, consultation and dispute resolution. The key provisions in the award we have considered concern the types of employment, particularly part-time employment, the wages and the classification structure, allowances, hours of work and associated penalty rates.

[22] We have considered all of the terms of the Stevedoring Industry Award. We have earlier indicated that this award will continue to apply to the same employees of Viterra employed at bulk loading plants as it has in the past. Like the Storage Award this award also has the standard modern award provisions. We note in particular that the award does not provide for part-time employment although it does have a guaranteed wage employment category. We have taken into account the wage rates and classification structure. We note in particular that the ordinary hours of work in the industry covered by this award are 35 hours per week.

The terms and conditions of employment applying in the industry in which the persons covered by the BHG Award operate, and the extent to which those terms and conditions are reflected in the BHG Award: item 4(5)(d)

[23] Employers and employees in the industry have traditionally been covered by enterprise specific awards.

[24] GrainCorp Operations Limited is an Australian company operating in the grain handling industry. It has made an application pursuant to schedule 6 for the making of a modern enterprise award or awards to replace some, or all, of its current enterprise awards. That matter is still being considered. For the purposes of this item however we can indicate that its operations are carried out in New South Wales, Victoria and Queensland at country and port terminals in those states. Enterprise agreements have traditionally been made and are in operation in respect of the overwhelming majority of its employees. We have considered the terms of the awards and the enterprise agreements and it is adequate for the purposes of this item to indicate that, like Viterra, they contain particular and specific provisions to accommodate the peculiar needs of the industry. Those provisions concern hours of work, shift work and rostering practices and categories of employment.

[25] Co-Operative Bulk Handling Limited (CBH) is a large employer in the grain handling industry operating in Western Australia. It was previously covered by enterprise specific awards in relation to its activities. We were not provided with submissions in relation to the terms and conditions of those awards and/or enterprise agreements that might have also applied to the relevant employees. No application was made by CBH under schedule 6 of the Transitional Act for a modern enterprise award or awards to replace its existing enterprise awards. We are only able to make a general observation about the likely coverage of the activities of CBH. To the extent it has grain handling and logistics operations we assume that the Storage Award covers the employees. To the extent it has port terminal related activities that fall within the coverage clause of the Stevedoring Industry Award that award would cover the relevant employees.

The extent to which the BHG Award provides enterprise-specific terms and conditions of employment: item 4(5)(e)

[26] Before we consider the submissions made by reference to this item, we refer to and adopt the comments made in Coleambally at paragraphs [68] to [72]. In this part of our decision consideration has been given to both the terms in the BHG Award which are to be reproduced in the proposed award and the work practices of Viterra, developed over many years, which are sought to be reflected in that new award.

[27] Part time engagements and flexible working arrangements are a key feature of the industry and either expressly provided for in the BHG Award or have been a term of employment of many of Viterra’s employees for many years. In this respect the BHG Award does not expressly provide for part time employment although that type of engagement has been common place and contained in its enterprise agreements.

[28] In respect to the need for flexibility, Mr Norman identified that during the 10 to 12 week harvest period between October and January, Viterra’s employee head count balloons from approximately 1000 to 2500. 21 It engages a substantial number of permanent part-time employees “to deal with the peaks and troughs in workflow throughout the year.”22

[29] Currently, Viterra has 161 permanent part-time employees across its operations, accounting for 23% of the total workforce. Around one half of these individuals are currently covered by the BHG Award. 23 These part-time arrangements allow Viterra to offer permanent positions to employees who would otherwise be engaged on a casual basis, providing them greater employment and financial security. It also gives Viterra the flexibility it needs when matters outside its control occur, such as severe weather conditions affecting the quantity of the grain harvest.24 Viterra submitted that its part-time arrangements are unique. A minimum engagement of four hours for a part-time employee will be provided for in the proposed award.

[30] Viterra made extensive submissions about its classification scheme and wage rates. As for the wage rates we note that the BHG Award (as is the case with other NAPSA’s) have not been able to be varied for some years. It has made calculations to reflect, in the proposed award, rates that would be similar to those had the award been varied for annual wage reviews from 2006 to date.

[31] The wages in the proposed award cover five classification levels. The levels do not easily align with the levels in the Storage Award. We note however that at the entry level the proposed award is slightly lower than that in the Storage Award. For the remaining levels the amounts are virtually the same if not greater. In each case when the industry allowance is added, and to the extent to which the levels can be said to be roughly comparable, the wages in the proposed award are higher.

[32] The BHG Award contains a basic classification system, initially introduced into the BHG Award as an interim classification structure. The intention was that the classification criteria be fine-tuned and refined but that did not eventuate. Viterra has implemented an updated and enterprise specific classification scheme through its enterprise agreements due to the need for its employees to be skilled in multiple functions. The classification scheme is specifically designed for Viterra’s business. It is to be contained in the proposed award.

[33] The span of ordinary hours in the BHG Award is 8am to 5pm, Monday to Friday. That span is also in the proposed award. There has been, and will continue to be, an ability to agree upon a different span with employees.

[34] The BHG Award at clause 4.1 enables the employer to engage weekly hire or casual employees. Casual employees engaged under the BHG Award are paid a casual loading of 20%. The proposed award contains a 25% loading which is in line with the loading contained in modern awards.

[35] The shift work clause in the BHG Award allows Viterra some flexibility in the implementation of shift work as required by its operational needs. It seeks to retain similar provisions in the proposed award.

[36] The BHG Award contains specific allowances to compensate for particular features of working in the grain handling industry. The proposed award will contain an industry allowance. It will also contain specific leading hand and washing time provisions. We have taken into account the submission made by Viterra about the provisions which it describes as being enterprise-specific. 25

[37] It is convenient for us to here deal with the contest about the terms of the coverage clause. The coverage clause in the proposed award, which is supported by the AWU, and the MUA’s alternate draft are reproduced below:

[38] The coverage clause in the proposed award is in the following terms:

[39] For present purposes we do not need to reproduce the definition of in “Bulk Handling and Storage of Grains, Pulses & Minerals” in the proposed award.

[40] The clause which the MUA submits we should place in any modern enterprise award we may decide to make is as follows: 26

“4. Coverage

4.1 This award covers the employer throughout Australia and its employees employed in the Bulk Handling, Storage, Containerisation of Grains, Pulses & Minerals in the classifications in this award to the exclusion of any other modern award.

4.2 This Award does not apply to employees who have not traditionally been covered by the Award, including managerial employees and all other salaried employees, employed by the employer.

4.3 This Award does not cover employees who would otherwise be covered by the Stevedoring Industry Award 2010.

4.4 The award does not cover an employee excluded from award coverage by the Act.”

[41] We have decided that those employees referred to by Mr Norman in his evidence and in exhibit Viterra 7, described as working on bulk loading plants and who have been covered by the Stevedoring Industry Award, will continue to be so covered. 27 The coverage of the modern enterprise award we will make is not intended to encompass those employees. It is only these employees who are covered by an enterprise agreement against which the Stevedoring Industry Award is used for the purposes of the better off overall test. That situation will not be disturbed by our ruling about coverage. We intend that the coverage of the proposed award will extend to all employees, including control room operators, who have traditionally been covered by the BHG Award. The coverage clause will read as follows:

“4. Coverage

4.1 This award covers the employer throughout Australia and its employees employed in Bulk Handling and Storage of Grains, Pulses & Minerals at any of the employer's bulk handling terminals and country sites and depots or persons engaged in the maintenance of the employer's bulk handling grain installations.

4.2 This Award does not cover employees at bulk loading plants who would otherwise be covered by the Stevedoring Industry Award 2010.

4.3 This Award does not cover employees who have not traditionally been covered by an award, including managerial employees and all other salaried employees, employed by the employer.

4.4 The award does not cover an employee excluded from award coverage by the Act.”

The likely impact on the persons covered by the BHG Award and the persons covered by the modern award referred to in paragraph (b), 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)

[42] For the employees covered by the BHG Award the proposed award will provide contemporary and improved minimum terms and conditions. We are not persuaded that, on balance, they would be better off if the Storage Award was to cover them. No employee will be worse off if the proposed award is made and none will be deprived of any of their current benefits.

[43] For Viterra, the proposed award will ensure that key features of the safety net which are essential to its enterprise will remain. It will be able to continue to conduct its operations in a competitive and efficient manner. Key aspects of the proposed award are not reflected in the Storage Award. If that modern award was to cover Viterra and its employees, this may result in the need for a restructure of the workforce and the nature of their engagements and have a negative impact on Viterra’s efficiency and competitiveness. It is not likely that the making of the proposed award will have any impact on persons covered by the Storage Award.

The views of the persons covered by the BHG Award: item 4(5)(g)

[44] Viterra has engaged in consultation and negotiation with the unions and its employees throughout the enterprise award modernisation process. The AWU supports the application. There is no suggestion in the evidence that any employees covered by the BHG Award oppose the application.

[45] The MUA is not covered by the BHG Award so it is not clear that its views are to be taken into account by reference to this item. We have taken the union’s views into account in our overall consideration of the application.

Any other matter prescribed by the regulations: item 4(5)(h)

[46] The only regulations made under this item relate to take-home pay orders which may be made in the context of making a modern enterprise award. No order is sought nor is one necessary. Accordingly, we do not need to discuss those regulations.

The modern awards, minimum wages and modern enterprise awards objectives

[47] We are satisfied that making the proposed award will further and/or be consistent with each of the modern awards, minimum wages and modern enterprise awards objectives.

[48] We turn to the modern awards objective. In doing so we indicate that all of our comments here should be read together as a number of the considerations under the sub-sections are also relevant to other sub-sections. Section 134(1)(a) requires consideration of relative living standards and the needs of the low paid. Little was said about this consideration. It is a neutral consideration in the context of this application.

[49] In so far as s.134(1)(b) of the Act is concerned, we are of the view that the need to encourage collective bargaining is likely to be met by our making the proposed award. We accept that Viterra already has a long history of enterprise bargaining with its workforce. The proposed award will provide an appropriate and relevant safety net of terms and conditions and provide a contemporary basis for future bargaining. We acknowledge that if the proposed award was not made, and the Storage Award covered the employees, that too would be likely to encourage enterprise bargaining. In this respect, however, we accept the submission of Viterra that it would be likely such bargaining would be impeded and more difficult.

[50] The evidence supports a finding that the making of the proposed award would lead to additional employees being engaged. This is consistent with s.134(1)(c). Workforce participation will be maintained in the areas of Australia at which Viterra operates, particularly in regional areas. Viterra submits it will be able to sustain its current operations and grow them where opportunities arise in future. If the proposed award is not made there may be a reduction in the workforce and a larger proportion will be engaged on a casual basis.

[51] For the reasons we have earlier given, the terms of the proposed award will further the considerations in s.134(1)(d). It will promote flexible work practices which suit the nature of the grain handling industry and Viterra’s enterprise.

[52] The proposed award contains overtime and penalty provisions which are consistent with s.134(1)(da). There is no basis on which to make any finding that the principle of equal remuneration referred to in s.134(1)(e) would be more likely to be furthered in the event either the proposed award was made or if it was not made. The proposed award is in reasonably simple and easy to understand terms consistent with s.134(1)(g). It will reduce the overlap with other modern awards.

[53] We accept the submissions of Viterra as to why the making of the proposed award will further the considerations in ss.134(1)(f) and 134(1)(h). Grain exports are very important to South Australia's economy. Grain is one of the largest, if not the largest, of the State’s exports. The proposed award will contain employment costs and not increase Viterra’s regulatory burden. It will reduce any negative impact to farmers in the states and local communities in which Viterra operates. It will enable Viterra to continue to meet the demands of growers and exporters.

[54] We are persuaded that the modern awards objective weighs in favour of making the proposed award rather than declining to do so.

[55] We turn to the minimum wages objective. A number of the considerations are similar to those in the modern awards objective and we do not propose to refer to them. We are persuaded that making the proposed award is necessary to establish and maintain a safety net of fair minimum wages. The wages provided for in the proposed award are appropriate for the employees who will be covered by the award and comparable with other minimum modern award wages. We are satisfied that making the proposed award is consistent with this objective.

[56] The modern enterprise objective has been taken into account in our consideration of each of the matters to which item 4(5) directs our attention. The making of the proposed award is consistent with the objective.

Conclusion

[57] We have considered all of the factors in item 4(5) we are required to take into account. In deciding whether or not to make a modern enterprise award, we have considered the modern awards objective, the minimum wages objective and the modern enterprise awards objective.

[58] We have decided to make a modern enterprise award largely in the terms contained in the proposed award. It will replace the BHG Award. We will provide a draft to the parties soon after we publish this decision. Some small modifications have been made to the draft as filed. For example, some clauses will be updated to reflect the most recent Full Bench decisions concerning standard modern award clauses. We will update the wages to reflect the outcome of the 2014-2015 Annual Wage Review.

SEAL2.jpg

SENIOR DEPUTY PRESIDENT

Appearances:

Mr A Short for Viterra

Ms J Gherjestani for the AWU

Mr N Keats for the MUA.

 1   AN150024.

 2   Viterra 2.

 3   Numerous drafts were filed reflecting agreement and modifications arising from time to time as a result of discussions between the parties. The final draft is dated 8 May 2015.

 4   MUA2.

 5   MA000053.

 6   Fair Work Act 2009 (Cth) s.134(1).

 7   Fair Work Act 2009 (Cth) s.284(1).

 8   [2014] FWCFB 2170.

 9   Id paras. [10]-[11].

 10   [2012] FCA 1315; [2012] FCAFC 114.

 11   [2015] FCAFC 95.

 12   Viterra 4 paras. 30-33.

 13   Viterra 4 paras. 35 and 42.

 14   Viterra 4 para. 36.

 15   AIRC Statement [2009] AIRCFB 865 at [88]-[89].

 16   [2009] AIRCFB 945 at para. [65].

 17   MA000084.

 18   Viterra 4 paras. 49-51.

 19   Viterra 10 para. 14.

 20   MA00053.

 21   Viterra 10 paras. 10-11, 22.

 22   Viterra 10 para. 42.

 23   Viterra 11 para. 8.

 24   Viterra 10 para. 45.

 25   Viterra 4 paras. 127-130 and as updated by Viterra 5 and Viterra 6.

 26   Correspondence from MUA dated 8 May 2015.

 27   We note this class of employee is also referred to in Viterra 7 as working on bulk loading platforms.

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