DECISION

Fair Work Act 2009
s.185 - Application for approval of a single-enterprise agreement

H&M Pty Ltd
(AG2016/2702)

Application for approval of the H & M Enterprise Agreement 2016. Application dismissed. Failure to satisfy the BOOT.

[1] H&M Pty Ltd (the Applicant/H&M) has applied to the Fair Work Commission (the Commission) for the approval of an enterprise agreement known as the H & M Enterprise Agreement 2016 (the Agreement). The Agreement is to operate for a period of 2 years following its approval. The application was made pursuant to s.185 of the Fair Work Act 2009 (the Act). Following enquiries from the Commission, the applicant advised that the correct name of the applicant was H&M Hennes & Mauritz Pty Ltd. 1 Pursuant to s.586 of the Act the application is amended to the extent that the applicant is correctly identified.

[2] The Agreement is a single enterprise agreement. The Agreement purports to cover retail employees in all states and territories of Australia who perform work in the classifications set out in the Agreement, and excludes senior management, storage/wholesale employees and clerical employees operating from head office.

[3] The applicant completed the required form F16 - Application for approval of an enterprise agreement and an F17 - Employers statutory declaration in support of an application for approval of an enterprise agreement. The Form F16 and the Form F17 were completed by the applicant’s Country Human Resources Manager, Ms Ossay Khorram.

[4] The Form F17 advised that on 3 November 2015, the applicant emailed all relevant employees the Notice of Employee Representational Rights (NERR) and on 7 March 2016, electronically forwarded a copy of the proposed Agreement to all employees. At the same time, the applicant advised employees of the vote which was to take place in relation to the approval of the proposed Agreement. The voting process commenced on 15 March 2016 and concluded on 17 March 2016. The F17 nominated the relevant reference instrument for the purposes of the better off overall test (BOOT) as the General Retail Industry Award 2010 (the Award).

[5] The F16 stated that the Shop Distributive and Allied Employees Association (SDA) was a bargaining representative in the negotiations. On 31 March 2016 the SDA completed a form F18 Statutory declaration of employee organisation in relation to an application for approval of an enterprise agreement. The F18 stated that the SDA supported the approval of the Agreement subject to it meeting the Better off overall test (BOOT). The F18 raised a number of concerns in respect of the BOOT and stated that the SDA disagreed with a number of statements made by the applicant in its F17 statutory declaration. The SDA stated that it sought to be covered by the Agreement pursuant to s.183 of the Act.

[6] On 28 June 2016, an email was received by the Commission from a Mr Josh Cullinan in respect of the Agreement approval application stating that he was concerned the Agreement would not result in all employees, and prospective employees, being better off overall.

[7] Following the lodgement of the Agreement approval application, the Commission corresponded with the applicant in respect to matters concerning the BOOT. A number of undertakings were provided by the applicant, however due to on-going concerns regarding the BOOT from both the SDA and Mr Cullinan, the application was listed for a hearing on 27 September 2016. Prior to the hearing the applicant provided written submissions in response to the Commission’s concerns and to the concerns of the SDA and Mr Cullinan.

[8] At the hearing Mr Nick Tindley and Ms Ekaterini Karabatos appeared for the applicant and Mr M Galbraith appeared for the SDA. Mr Cullinan appeared by video link from Melbourne.

Concerns of SDA

[9] In addition to the F18 filed by the SDA, the Commission received correspondence dated 18 July 2016, raising the following issues:

• The Agreement does not include an overtime clause and contains reference to additional hours which are inferior to the overtime provisions in the Award;
• Under the Agreement employees may be rostered to work every Sunday whereas the Award provides that a maximum of 3 Sundays in 4 may be rostered; and
• In an analysis of 50 randomly chosen casual rosters 2/50 employees were worse off compared to the Award.

[10] At the hearing the SDA maintained its opposition to the approval of the Agreement based on the above concerns. When becoming aware of additional undertakings to be provided by the applicant, the SDA sought an opportunity to consider those undertakings. Section 190(4) of the Act requires the Commission to seek the views of bargaining representatives before accepting an undertaking.

[11] On 6 October 2016 the SDA corresponded in writing with the applicant’s representatives regarding the undertakings. The SDA referred to an email they had received from the applicant. The SDA advised that it was not satisfied that the undertakings met its concerns with the lower overtime rate (Additional Hours rate Mon-Sat) and the more limited circumstances when overtime is payable. The employer’s ability to roster employees 6 days in a week remained a concern for the SDA. No wage calculations were provided by the SDA to support its conclusions.

[12] The SDA advised that it was content with the commitment from the applicant that any agreement between the employer and a part time employee will specify the days of the week and the start and finish times for any given shift. The undertakings in regard to Sunday work and compassionate leave were also acceptable to the SDA.

[13] Where the applicant has provided undertakings in respect of limiting the number of hours worked on weekends (casuals) and weekday evenings and Saturdays (full time and part time employees) the SDA continued to express concerns with these restrictions being averaged over a 52 week period and stated that the averaging should apply to each fortnightly pay period.

[14] A further conference was conducted by the Commission with the SDA and H&M on 16 November 2016 to address the concerns raised by the SDA in its 6 October 2016 correspondence to the applicant. H&M undertook to provide a further written response to the Commission following the conference. The additional response was received on 15 December 2016 and contained amended and consolidated undertakings.

[15] The SDA advised on 19 December 2016, that despite further consultation with the applicant they still maintained their opposition to the approval of the Agreement. The SDA concerns included the BOOT not being met due to:

• The Agreement providing for a 10 rather than 12 hour break between shifts without employee agreement, which is required under the Award;
• The averaging of working hours for casual employees over a 13 week period to ensure no more than 65% of hours are worked on weekends, rather than over the normal pay period;
• The averaging of working hours for part time employees over a 6 week period to ensure no more than 60% of hours are worked on weekday evenings and weekends, rather than averaging working hours over the normal pay period;
• The spread of hours including those in the ‘peak needs period’ being greater than the Award.

Concerns raised by Mr Cullinan

[16] In correspondence to the Commission dated 27 June 2016 2, Mr Cullinan expressed the view that the loss of penalty rates on weeknights and Saturdays and a lower penalty rate on Sundays leaves many workers worse off than the Award. Concern with the additional hour’s rate in the Agreement was also raised. Where employees agree to work reasonable additional hours, it was submitted by Mr Cullinan that the Agreement would allow employees to be paid less than the Award.3 Mr Cullinan stated that any non-casual employee working more than 60% of their hours after 6pm on a weekday or on a Saturday would be worse off than the Award. In assessing the BOOT, Mr Cullinan also placed emphasis on whether ‘prospective employees’ would be better off overall.4

[17] Further correspondence was received by the Commission from Mr Cullinan dated:

• 25 July 2016;
• 17 August 2016;
• 20 September 2016;
• 24 October 2016; and
• 3 November 2016.

[18] Mr Cullinan submitted that even in circumstances where the Agreement afforded a base rate of pay higher than that of the Award, as the Agreement permits an employee to work only on a weekend or a week night, this would leave the employee worse off than the Award.

[19] Mr Cullinan took issue with the applicant providing indicative rather than actual rosters of work and also raised concerns about the business demand for employees to work during periods that would ordinarily attract penalty rates under the Award. 5 Mr Cullinan’s correspondence of 25 July 2016 criticised the applicant for not providing the Commission with evidence of the effect the Agreement would have on employees’ actual wages once implemented.

[20] The correspondence by Mr Cullinan of 25 July 2016 also raised questions over the veracity of the Form F17 filed by the applicant. In particular, Mr Cullinan argued that whilst the F17 disclosed that the NERR was issued on 3 November 2015, the F17 also indicated that employees were given approximately one month’s notice of the information sessions, with the first session commencing on 9 November 2016. Mr Cullinan suggests that this likely demonstrated that the applicant had issued the NERR later than 14 days after it had agreed to bargain in contravention of s.173(3) of the Act. Mr Cullinan pursued this argument in his correspondence of 17 August 2016.

[21] Mr Cullinan also raised matters regarding whether the Commission could be satisfied that the applicant explained the terms of the Agreement and the effect of those terms to all employees. 6 Section 180(5) of the Act requires an employer to take all reasonable steps to ensure that the terms of the Agreement and the effect of those terms is explained to the relevant employees.

[22] Mr Cullinan argued that the information meetings which were held by the applicant to explain the Agreement to employees were conducted some five months prior to the employees being given access to the Agreement. Mr Cullinan was concerned that during the period between these information sessions and the final vote, the Agreement may have changed in any number of ways and these changes were not communicated to employees. 7

[23] Mr Cullinan further argued that within this five month timeframe there was substantial change to the scope and size of the applicant’s enterprise, with the applicant employing more persons across newly opened stores. 8 Mr Cullinan also contended that the explanation of the Agreement by the applicant did not take into account the individual circumstances of employees, that the Award was not provided to employees and that employees had to attend information sessions presumably at their own expense.9 In his correspondence of 17 August 2016, Mr Cullinan asserted that the document distributed to H&M representatives to explain the Agreement to employees was not a sufficient or full explanation.

[24] In response to the consolidated undertakings provided by the applicant, Mr Cullinan claimed that the undertakings result in a substantial change to the Agreement and cause financial detriment to employees. 10 Mr Cullinan contended that, because the undertakings provide for limitations on the number of hours certain employees could work, some employees may suffer a reduction in the hours of work if the Agreement were to be approved.

[25] Mr Cullinan also argued that the limitations the undertakings placed on certain hours of work were detrimental because the limitations were averaged over a 52 week period. 11 Mr Cullinan contended that, in accordance with the Full Bench decision of Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia Australian Manufacturing Workers' Union v Main People Pty Ltd,12 an employee must be better off than the Award each pay period. Subsequently, Mr Cullinan insisted that the limitations on hours of work must be calculated each pay period rather than over a 52 week period.

H & M submissions

[26] In respect of salaried employees, the applicant submits that clause 15.3 of the Agreement ensures that salaried employees are better off overall because there is a requirement for the applicant to ensure that the minimum salary is at least that which would have been paid for all hours worked under the Award. This guarantee, in conjunction with the additional benefits received by salaried employees such as longer breaks, parental leave, volunteer leave, compassionate leave, and increased notice of termination ensures that employees are better off overall under the Agreement.

[27] A statement 13 from the Country Human Resources Manager, Ms Ossay Khorram-Hamid,14 was forwarded to the Commission on 1 July 2016. Ms Khorram-Hamid gave details as to how the employees were advised of the terms of the Agreement and the effect of those terms on the employees. The explanation of the Agreement involved the applicant visiting each state in which it operates to hold discussions with employees in relation to questions they may have concerning the Agreement. Employees were paid for their attendance at these workshops. Ms Khorram-Hamid also attested to there being small meetings in each H&M store which were organised by store managers and attended by employees who had specific, individual questions to ask in relation to the Agreement. H&M also advised the Commission that employees were paid for all time spent at workshops.15

[28] Following the workshops, H&M designated one employee at each store to be the responsible person for fielding and responding to questions relating to the Agreement.¹⁶ Additionally, employees were provided with access to a dedicated email address where they could direct any comments, questions or concerns in relation to the Agreement. The applicant received and responded to a substantial number of enquiries sent to that email address between 3 November 2015 and 17 March 2016. ¹⁷

[29] In addressing the matters raised by Mr Cullinan, the applicant stated that it had conducted a detailed analysis of working patterns and that the highest percentage of hours worked by any casual employee on weekends was 51.9%. Based on its analysis, the applicant determined that it would provide an undertaking to increase the Monday to Saturday rate of pay for casual employees by 35 cents per hour. The applicant contended that this would ensure that every casual employee, based on average working hours, was clearly better off under the Agreement.

[30] At the request of the Commission the applicant provided an undertaking 18 to confirm its intention that casual employees will not be required to work more than 51.9% of their hours on weekends which reflects the analysis of existing rostering arrangements.

[31] In respect of full-time employees, it was submitted that it was not possible for such employees to work more than 60% of their hours on weekday evenings and Saturdays as the business does not operate enough hours at those times. At the request of the Commission the applicant provided an undertaking that reflects this position. 19

[32] The applicant submitted that in addition to the higher hourly rate of pay for permanent employees, employees were entitled to paid leave at rates which are higher than provided for under the Award.

[33] In regards to additional hours, the applicant contends that the Agreement makes it clear that an employee needs to agree to work reasonable additional hours, a term which is not inconsistent with the equivalent provision in the Award.²⁰

[34] During the access period, all employees were provided with a copy of the proposed final Agreement and had access to a copy of a summary document which outlined the further changes that had been made as a result of various negotiations and the next steps in the voting process. 21

[35] In addition to the above steps being undertaken, an online information portal was created by the applicant. The online information portal was updated every week and contained information regarding the Agreement, its impact and questions that had been received in relation to the Agreement. 22

[36] At the hearing on 27 September 2016, the applicant relied on its various written submissions previously forwarded to the Commission following the filing of the application.

[37] On 14 October 2016 the Commission received further correspondence from the applicant which purported to address the concerns raised at the September 2016 hearing. The correspondence advised that the applicant had held discussions with the SDA.

Overtime hours

[38] The applicant provided calculations 23 to demonstrate that an employee could work up to 6.5 hours of overtime in a fortnight and remain better off than under the Award. The calculations were said to adopt a ‘worst case scenario’ where overtime is worked at times where the Award provides an entitlement and the Agreement does not.

[39] Sub clause 9.7 of the Agreement provides that in circumstances where an employee works outside the ordinary hours of work, the Additional Hours rate for full time and part employees stipulated under clause 15.2(a) is paid. The respective hours provisions in the Award and the Agreement are as follows:

[40] In the case of retailers whose trading hours extend beyond 9.00 pm Monday to Friday or 6.00 pm on Saturday or Sunday, the finishing time for ordinary hours on all days of the week is 11.00 pm.

[41] Contrary to the submissions of the SDA, the applicant contended that the obligations under the Award regarding roster variations and overtime apply to part time employees where the variation is not in writing. The Agreement is said to mirror the Award provisions.

Shift breaks

[42] Clause 31.2 of the Award provides for a 12 hour break between shifts with the ability for an employer and employee to agree to a lesser period which is not less than a 10 hour break between shifts.

[43] Clause 9.4 of the Agreement provides for a 10 hour break between shifts with the ability to for the parties to agree to a lesser break between shifts. The applicant has provided an undertaking to vary this sub clause removing the ability for the employer and an employee to agree to a break of less than 10 hours between shifts.

Part time employees

[44] The applicant’s correspondence of 14 October 2016, confirmed that, with respect to part time employees, one week prior to commencement of their first shift a part-time employee is provided with an agreed pattern of work which specifies the days of the week to be worked and the start and finish times for each day worked. An undertaking to reflect this practice has been provided. The undertaking is in the following form:

“Any agreement made between the Employer and the Employee in line with clause 5.1(c) of the Agreement, will specify the days of the week to be worked, and any start and finishing times for any given shift.”

Determination

[45] The objects of Part 2-4 Enterprise Agreements, of the Act state there is to be a focus on providing a simple, flexible and fair process that enables collective bargaining at the enterprise level that deliver productivity benefits. An enterprise agreement thus provides for an employer and its employees to negotiate an agreement to best suit the employer’s business and the employees’ needs.

Relevant Statutory Provisions
[46] In approving an enterprise agreement the Commission must be satisfied that the requirements of s.186 are met which in part states:

“Section 186 When the FWC must approve an enterprise agreement—general requirements

Basic rule

186(1) If an application for the approval of an enterprise agreement is made under section 185, the FWC must approve the agreement under this section if the requirements set out in this section and section 187 are met.

Note: The FWC may approve an enterprise agreement under this section with undertakings (see section 190).

Requirements relating to the safety net etc.

186(2) The FWC must be satisfied that:

(a) if the agreement is not a greenfields agreement—the agreement has been genuinely agreed to by the employees covered by the agreement; and

(b) if the agreement is a multi-enterprise agreement:

(i) the agreement has been genuinely agreed to by each employer covered by the agreement; and

(ii) no person coerced, or threatened to coerce, any of the employers to make the agreement; and

(c) the terms of the agreement do not contravene section 55 (which deals with the interaction between the National Employment Standards and enterprise agreements etc.); and

(d) the agreement passes the better off overall test.”

Genuine agreement

[47] Section 180(5) of the Act requires the employer to take all reasonable steps to ensure that the terms of the Agreement and the effect of those terms are explained to the relevant employees. Any explanation provided must take into account the particular circumstances and needs of the relevant employees.

[48] The applicant stated that the Country HR Manager and the Area (Manager) Human Resources (Stores) conducted a series of ‘road shows’ across the country holding face-to-face meetings with all interested employees to explain the terms of the Agreement and the effect of those terms on employees. 24

[49] I am satisfied, (subject to the comments made below in relation to salaried employees) that based on the written submissions of the applicant that s.180(5) of the Act, requiring the employer to take all reasonable steps to ensure that the terms of the Agreement and the effect of those terms are explained to the relevant employees, has been met. This conclusion is predicated upon the following:

• communication workshops held across each State in each store;
• small meetings held in relation to the Agreement in each H&M store which were organised by Store Managers;
• appointment of an employee at each store to be responsible for responding to all questions relating to the Agreement;
• provision of a dedicated email address where employees could direct any comments or questions concerning the Agreement;
• meetings held between the applicant and the SDA between November 2015 and January 2016; and
• provision of an online information portal where on a weekly basis, information concerning the Agreement would be uploaded.

NERR

[50] In respect to when the applicant initiated bargaining and the requirement to issue a NERR within 14 days as per s.173(3) of the Act, the applicant states that it initiated bargaining for the Agreement on 2 November 2015, and the NERR was sent out on 3 November 2016. The fact that H&M had been working on the Agreement prior to this date is said to be of no consequence, as bargaining is not initiated by the employer until it communicated its intention to bargain to employees.

[51] I am satisfied the NERR was provided to employees in accordance the statutory requirements.

BOOT

[52] The concerns regarding the BOOT have been validly made by both the SDA and Mr Cullinan, and in the main are consistent with the issues identified by the Commission.

[53] In Armacell Australia Pty and Others²⁵ the application of the BOOT was explained by the Full Bench in the following manner:

“The BOOT, as the name implies, requires an overall assessment to be made. This requires identification of terms which are more beneficial for an employee, terms which are less beneficial and an overall assessment of whether an employee would be better off under the agreement.” 26

[54] In respect of the BOOT, s.193(1) of the Act requires the Commission to be satisfied, at the test time, that is when the application for approval is made as per s.193(6), that each award covered employee and each prospective award covered employee would be better off overall if the Agreement applied to the employee than if the relevant modern award applied to the employee.

[55] Clause 15 of the Agreement, Remuneration, provides that Sales Advisors are to be paid an hourly rate, whereas other employees are engaged on a minimum annual salary which is set out in the individual’s contract of employment. The salaries, including those of part-time employees are to include full compensation for all hours worked including all reasonable additional hours and work on public holidays.²⁷ The Agreement states that the employer will ensure that the minimum salary paid to salaried employees is at least that which would have been paid for all hours worked under the Award. The applicant has advised that of the 1,198 employees to be covered by the Agreement 242 were salaried employees at the time of the vote.²⁸

[56] In respect of Sales Advisors, they receive an hourly base rate dependent upon whether their hours are worked between Monday and Saturday, on a Sunday, on a public holiday or are additional hours over and above ordinary hours. The Monday to Friday rate (excluding the evening rate) is higher than the Award prescription, whereas the Saturday, Sunday, public holidays and additional hours (overtime) rates are less than those prescribed by the Award. It is to be noted that the Sunday and public holiday rates are only marginally less than the Award rates. The ‘additional hours’ rate is also only marginally less than the Award rate where three or less hours of overtime is worked on a daily basis. However, it is also noted that
the span of ordinary hours provided for in the Agreement is greater than that provided for under the Award.

[57] The Agreement also provides for both hourly rate employees and salaried employees to receive a 2% annual wage increase commencing from the first pay period on or after each anniversary of the commencement date of the Agreement.

[58] In the applicant’s F17 the terms and conditions of the Agreement that are said to be more beneficial or less beneficial than the Award are listed. In respect of the more beneficial terms and conditions within the Agreement, the applicant relies on the following:

• higher rate of pay for salaried employees and a higher minimum wage for sales persons and casual employees working Monday to Friday;
• part-time employees being provided with a guarantee of 10 hours per week based on an agreed pattern of work;
• more beneficial meal and rest breaks for all employees;
• ability to cash out annual leave;²⁹

• paid parental leave;

• one day’s volunteer leave;

• ability to apply for 3 months or greater unpaid leave where exceptional circumstances exist;

• minimum of 4 weeks’ notice of termination irrespective of length of service for all salaried employees; and
• improved compassionate leave.³⁰

[59] The terms and conditions of the Agreement acknowledged by the applicant as being less beneficial than the Award were said to be:

• an increase in the span of ordinary hours (as indicated above) including a “peak needs period” of one month over the Christmas period;
• an increase in the maximum number of ordinary hours that can be worked in one day with a shorter break on commencing the next work period;
• lower weekend and public holiday penalty rates;
• decreased overtime rates; and
• potential for employees to work every Sunday 31

[60] The applicant claimed that the higher minimum weekly wage offsets and exceeds the identified detriments in the Agreement as compared to the Award for Sales Advisors and for salaried employees. Additionally, it is said by the applicant that the Agreement requirement that salaried employees receive, as a minimum, what would have be paid for all hours worked under the Award would resolve all BOOT issues.

[61] The applicant submits that the SDA’s concerns regarding the reference in the Agreement at clause 9.6 that employees will not be required to work more than 6 consecutive days is misguided as it needs to be read in conjunction with clause 9.5 that provides for a maximum of 20 work days in a four week period. While it is a different provision from the Award it is not to be seen as a lesser benefit than the Award as it allows for employees to have correspondingly more consecutive days off.

Undertakings

[62] On 17 June 2016 the applicant submitted that the Agreement passes the BOOT without the need for undertakings 32 and further stated on 14 December 2016 that it had addressed every concern raised in relation to the Agreement.

[63] Section 190 of the Act allows the Commission to approve an agreement on accepting a written undertaking from the employer where the Commission has a concern that the agreement does not meet s.186 and s.187 of the Act. Any written undertaking provided by an employer is taken to be a term of the agreement where the undertaking is accepted by the Commission and the agreement is approved (s.191(1)).

[64] In Re McDonald’s Australia Enterprise Agreement 2009 33 the Full Bench held that the role of the Commission includes facilitating enterprise agreements:

“[13] The appellants emphasised the facilitative aspects of these objectives. We agree that these objectives place the primary role for making enterprise agreements on the parties to those agreements and their representatives and that the role of Fair Work Australia (FWA) [as it was then known] includes facilitating the making of enterprise agreements. In general we believe that the requirements for approval should be considered in a practical, non-technical manner and that reasonable efforts should be made to clarify matters with the parties and consider undertakings to clarify or remedy concerns to the extent that these may be available under s.190 of the Act.” 34

Salaried employees

[65] Pursuant to sub clause 5.1(a) Salaried Employees are all employees engaged on a permanent full time basis in the positions of:

• Store Manager/Assistant Store Manager;
• Department Manager/Floor Manager;
• Cash Office Responsible;
• Visual Merchandiser and Visual Merchandiser Manager; and
• DM Trainees.

[66] Clause 15.3 of the Agreement - Salaried Employees, states that salaried employees will be paid at least the minimum annual salary that would have been paid for all hours worked under the Award. At the hearing the Commission enquired as to how this was intended to be monitored by the applicant. In correspondence dated 14 October 2016 the applicant advised that there was no trigger for a reconciliation but rather an on-going obligation to monitor the Award entitlements against the salary paid.

[67] In respect of a salaried employee’s remuneration, clause 15.3 of the Agreement, Salaried Employees, refers to employees engaged on an annual salary which is set out in the employee’s individual contract of employment, with part time employees receiving a proportionate amount of the full time salary. 35

[68] Clause 15.3 does not set out the actual salaries which are paid to employees in all categories under the Agreement other than Sales Advisors. The Commission requested details of the annual salaries paid to employees to enable the BOOT to be undertaken. This information was provided to the Commission although the applicant states that as the Agreement provides that salaried employees are to be paid at least that which would have been paid for hours worked under the Award, details of salaries paid is not required. As clause 15.3 only refers to being paid at a level equivalent to the Award and not at a rate above the Award, regard needs to be had for the actual salaries paid and when a reconciliation would be conducted in order to establish whether employees, in view of other terms and conditions contained within the Agreement, would be better off overall. 36

[69] A copy of the salaries attached to the salaried positions was provided to the Commission on 4 May 2016 and in an undertaking dated 9 May 2016 and in further subsequent undertakings.

[70] On 15 December 2016 the applicant provided a list of amended and consolidated undertakings. The final amended and consolidated undertakings 37 stipulate that:

• Employees will not be required to work on more than 6 consecutive days, or more than 3 Sundays in any 4 week period;
• The rate for adult casuals working Monday to Saturday as per 15.2(b) of the Agreement will increase from $24.50 to $25.15 per hour;
• Casual employees will not be directed to work more than 65% of their hours on weekends, averaged over a 13 week period;
• Minimum salaries (exclusive of superannuation) for salaried employees are expressed in a dollar figure;
• Full time or part time employees will not be required to work more than 7 additional hours in any given week, averaged over a 4 week period;
• Part time employees will not be directed to work more than 60% of their hours on weekday evenings and Saturdays averaged over a 6 week time period;
• Full time employees will not be directed to work more than 60% of their hours on weekday evenings and Saturdays averaged over a 52 week time period or upon termination of employment.
• The provisions of sub clause 9.8 of the Agreement in relation to changing part time hours will not be applied; and
• The provisions of clause 9.4 in respect of an employee agreeing to a break between shifts of less than 10 hours will not be applied.

[71] The applicant, via its representative in correspondence dated 15 December 2016, 38 stated that it had elected to provide the undertakings after considering that they would have little or no impact on the Agreement. While the above undertakings may not result in substantial change to the Agreement it is difficult to comprehend how they can be described as having little or no impact on the Agreement.

[72] This application has been the subject of much correspondence between the Commission and the applicant, the SDA and Mr Cullinan. There has been one public hearing and a private conference with the applicant and the SDA. During this process the applicant has been asked by the Commission to provide undertakings to alleviate concerns with the BOOT. The undertakings have generally been provided, however the Commission’s concern with the time frames allocated to ensuring employees are better off overall under the Agreement than the Award have not been fully addressed. This issue was specifically raised at the 16 November 2016 conference where the applicant expressed difficulty with ‘reconciling’ wages paid and hours worked within a normal pay period as per the Award requirement.

[73] The applicant was advised that in instances where employees worked a majority or all of their hours on Saturdays and evenings it was unlikely they would be better off overall in comparison with the Award. H&M advised in correspondence dated 11 August 2016 that in relation to permanent employees it was not possible for a full time employee to work more than 60% of their hours on weekday evenings and Saturdays as the business does not operate enough hours at those times for this to occur.

[74] It was acknowledged however by H&M that casual employees, of whom there were 299 at the time of the vote, 39 who worked 51.9% of their hours on weekends, would need to have their Monday to Saturday rate under the Agreement increased by 0.31c per hour to meet the BOOT. An undertaking to increase the casual Monday to Saturday rate by 0.35c per hour was provided. The Agreement rate for Sundays remained unchanged.

[75] On 15 December 2016, H&M stated that it had taken the decision that it would be appropriate to increase the casual rate Monday to Saturday by a further 30 cents per hour being a total of 0.65 per hour on the basis that no casual would be required to work more than 65% of their hours on weekends. An undertaking to that effect was provided and a table of calculations provided to demonstrate that a casual employee  40 who worked a 20 hour week with 65% of their hours on a weekend would be better off under the Agreement than the Award. The calculations provided by the applicant showed a gross benefit of 0.58c per week to a casual when compared to the Award rate entitlement.

[76] The benefit of 0.58c per week needs to be contrasted with the way the undertaking to restrict the working hours of casuals to no more than 65% on weekends is framed. The relevant undertaking states that the 65% of hours worked on a weekend is to be averaged over a 13 week period, resulting in the ability for casual employees being required to work 100% of their hours on weekends for significant periods. Unlike part time employees under the Agreement there is no guarantee of a minimum number of casual hours per week other than a right to a minimum of 3 consecutive hours on any shift. In correspondence to the Commission dated 26 October 2016 the applicant submitted that it would be unreasonable for the Commission to require an undertaking that limits the way employees can be rostered in each pay cycle.

[77] Casual employees engaged under the Award are entitled to the Award rates on a weekly or fortnightly basis.

“23. Payment of wages

“Wages will be paid weekly or fortnightly according to the actual hours worked each week or fortnight, or may be averaged over a period of a fortnight.

All wages shall be paid on a regular pay day. The employer must notify the employee in writing as to which day is the pay day. Where for any reason the employer wishes to change the pay day, then the employer shall provide at least 4 weeks’ written notice to the employee of such change.

An enterprise which prior to the 1st January 2010, paid particular classifications of its employees on a monthly pay cycle may continue to pay these particular classifications of employees on a monthly pay cycle. However no employee classified at level 3 or below under this Award may be paid on a monthly pay cycle and must be paid either weekly or fortnightly.”

[78] The Agreement provides that wages will be electronically transferred to the employee’s designated bank account on a fortnightly basis or at such other frequency determined by H&M. 41 It is noted that the ability for the employer to unilaterally determine that wages be paid less frequently than each fortnight may be seen as a lesser benefit than the Award prescription.

[79] The undertaking to increase a casual employee’s Monday to Saturday hourly rate to ensure that when working up to 65% of their weekly hours on a weekend be calculated over a thirteen week period is clearly a provision significantly inferior to the Award entitlement of being paid ward rates no less than each fortnight 42. This is particularly the case as casual employees are engaged under the Agreement by the hour with no guarantee of any working hours each week. A wait of three months or more to receive an award entitlement plus 0.58c per week is an inferior condition. This concern was raised by the Commission with the applicant at the 16 November 2016 conference.

[80] Casual employees (as opposed to full time and part time employees) don’t enjoy the full range of benefits under the Agreement said by the applicant to be more beneficial than the Award. Those that do apply in my view are not of such significance to be considered as placing casual employees better off overall under the Agreement than the Award having regard to being required to wait 13 weeks to receive the Award entitlement plus 0.58c per week.

[81] There is no demonstrated mechanism or process as to how the undertaking to limit casual employee’s hours to 65% on weekends over a 13 week period is to be monitored or enforced or what should occur where the 65% of hours worked on a weekend is exceeded.

[82] In any event the calculations provided by the applicant are problematic.

[83] Marked as Attachment A to the applicant’s written submissions of 15 December 2016, is the following calculation demonstrating a 0.58c per week benefit over the Award for casuals working 65% of their hours on weekends. In this instance a casual employee works 20 hours in a week.

[85] The above calculations, including that provided by the applicant, demonstrate that depending on the actual hours worked, an employee may or may not be financially better off under the Agreement with the undertaking provided by the employer. This is based on the minimum rostered shift being 3 hours and the maximum 10 hours for a casual employee. It is noted that the rate used for the calculations is appropriate for the ‘test time’ being when the application for approval is made (s.193(6)) but that the Award rate has since increased with the handing down of the Annual Wage Review 2015–16 decision on 31 May 2016 increasing the casual hourly rate to $24.30 effective from 1 July 2016.

[86] Further examples of a detriment being incurred when working under the Agreement occur where a casual employee works:

• 3.15 hours Monday to Friday and 5.85 hours on a Sunday;
• 3 hours Monday to Friday and 3 hours on Saturday and 3 hours on Sunday.

[87] The additional undertaking provided by the applicant to increase the casual hourly Monday to Saturday is not sufficient in all potential rostering arrangements to provide a higher rate than the Award.

[88] The undertakings provided by the employer are not sufficient to satisfy the BOOT in respect of casual employees. Pursuant to s.190(3) of the Act I consider that the undertakings result in financial detriment to casual employees covered by the Agreement and as such the Agreement cannot be approved. Having regard to the exhaustive attempts to obtain satisfactory undertakings to date I am not prepared to allow the approval process to be extended any longer.

[89] One further matter of concern regarding the undertakings provided by the applicant arises from the undertaking regarding salary rates. The Award does not provide for annualised salaries whereas the Agreement provides that all team members engaged as permanent full time employees in specified roles will be engaged on annualised salaries. As discussed above the actual salaries paid were not contained in the Agreement other than a reference at clause 15.3 that H&M will ensure that the minimum salary paid is at least that which would have been paid for all hours worked under the Award.

[90] Following a request by the Commission, the applicant provided a copy of the annual salaries attached to the salaried positions on 4 May 2016 and in an undertaking dated 9 May 2016. In subsequent undertakings on 20 May 2016 the applicant advised that the 242 salaried employees were made aware of the terms and conditions that would apply to them prior to the vote on the Agreement being conducted. The advice stated:

“Salaried employees had a very clear understanding of the terms and conditions that would apply to their employment prior to the vote on the agreement being conducted. Salaried employees were provided with the following information during the various enterprise agreement communications workshops held:

a. They were provided with information about actual minimum salaries payable to them (which were those outlined to the Commission in the undertaking dated 10 May 2016).

b. That they would be paid at least those salaries and that while some employees would experience an increase in their salary no employee would experience a decrease.

c. That the agreement also provided a guarantee that they would be paid no less under their salary than they would be paid under the General Retail Industry Award for the same hours they work.

We also note for the Commission’s reference that at present, all salaried employees are receiving at least the salaries provided for in the undertaking, with the majority on higher salaries.

We consider that, given the steps taken by the employer, there can be no doubt that salaried employees of H&M entered the voting process with a full understanding of the terms of the proposed agreement and their effect on them.”

[91] The position of H&M was further confirmed in the signed statement of Ms Khorram-Hamid, dated 30 June 2016. The salary rates were also provided in further written undertakings provided to the Commission dated 26 September and 14 October 2016 and reflected the rates provided in the first instance.

[92] On 15 December 2016, the applicant provided a list of amended and consolidated undertakings which included the annualised salary rates to which no specific mention was made by the applicant other than to state the undertaking clarified the salary ranges that already exist, and in many instances are already applied within the applicant’s business. 43

[93] In respect of the annualised salaries, a number of classifications contained salary rates less than those previously advised, and no reference was made to the lesser rates let alone the reason for the reductions. As an example, the annual salary for a Store (A) Assistant Store Manager was $5,000 less than previous undertakings provided.

[94] On contacting Ms Khorram-Hamid, the applicant’s Country Human Resources Manager, my Associate was advised that the reduced figures were not the result of any clerical error but amended due to budget reviews and new stores having opened since the vote to approve the Agreement. Ms Khorram-Hamid advised that despite the reduced salaries employees involved in the vote or existing stores will not be affected.

[95] There are a number of difficulties with this explanation:

• The Commission was not advised of any change to the undertaking that had previously been provided in respect of salary rates for the purposes of assessing the BOOT;
• The undertaking with reduced salaries does not refer to employees involved in the vote or existing stores not being affected by the reduced salary rates;
• The Agreement’s coverage is not restricted to existing stores at the time of the vote but applies to all employees who work in the relevant classifications set out in the Agreement in all states and territories;
• The BOOT is to be applied as at the test time, not only to each award covered employee, but each prospective award covered employee; and
• The reduction in salary rates for certain classifications in new stores for employees not involved in the vote is contrary to there being “no doubt that salaried employees of H&M entered the voting process with a full understanding of the terms of the proposed agreement and their effect on them” and raises an issue as to whether the Agreement was genuinely agreed.

[96] For the reasons provided above the application for the Agreement’s approval is dismissed.

Appearances:

Mr N Tindley and Ms E Karabatos, FCB Group on behalf of H&M

Mr M Galbraith for the SDA

Mr J Cullinan on his own behalf

Hearing details:

2016.

Sydney, Video link to Melbourne

September 27.

Further written submissions

H&M 14 and 23 December 2016

SDA 19 December 2016

DEPUTY PRESIDENT

 1   Email of 18 October 2016

 2   Email to Fair Work Commission registry dated 27 June 2016

 3   Ibid

 4   Email of Mr Cullinan dated 20 September 2016

 5   Letter of 25 July 2016

 6   Ibid

 7   Email from Mr Cullinan dated 25 July 2016

 8   Ibid

 9   Ibid

 10   Letter from Mr Cullinan dated 24 October 2016

 11   Ibid

 12   [2015] FWCFB 4467

 13   Statement of Ossay Khorram-Hamid dated 30 June 2016

 14   The originating application was signed by Ms Khorram who presumably is now Ms Khorram-Hamid

 15   Outline of Submissions 11 August 2016 at [24]

16 Paragraph (25) of 11 August 2016 written submissions

17 Paragraph (26) of 11 August 2016 written submissions

 18   Undertaking dated 14 October 2016

 19   Ibid

20 The applicant's written submissions of 11 August 2016 at paragraph (11) refer to clause 12.3 of the Award, it is assumed that this is an error and the reference should read clause 29.1 Reasonable overtime

 21   Paragraph (29-30) of 11 August 2016 written submissions

 22   Ibid at (31)

 23   Correspondence from the Applicant dated 14 October 2016

 24   Statement of Ossay Khorram-Hamid 30 June 2016 at (5)

25 [2010] FWAFB 9985

 26   Ibid at (41)

27 In the making of the modern Retail Award the Full Bench resisted an application to insert annualised salary provisions; [2010] FWAFB 1958

28 Email of 20 May 2016

29 It is noted that on 11 June 2015 a Full Bench of the Commission determined that all modern awards should contain a provision allowing for the cashing out of annual leave; [2015] FWCFB 3406. A cashing out provision was inserted into the General Retail Industry Award 2010 on 29 July 2016; PR583010

30 Raised by the applicant at the hearing of 27 September 2016

 31   This was not contained in the F17 but expressed at the September 27 hearing

 32   See written submissions of 17 June 2016 at 31(a)

 33   [2010] FWAFB 4602

 34   Re McDonald’s Australia Enterprise Agreement 2009 [2010] FWAFB 4602 at [13]

 35   It is noted that under subclause 5.1(a) of the Agreement the definition of salaried employees refers only to full time employees

 36   See comments in Shop, Distributive & Allied Employees Association v ALDI Foods Pty Ltd of Jessup and White JJ [2016] FCAFC 161 regarding ‘makegood’ clauses

 37   Undertakings dated 14 October 2016

 38   Written submissions of 14 December 2106 at [12]

 39   See F17 question 4.3

 40   H&M equate Sales Assistants to a Retail Employee Level 1, see answer question 3.3 of the F17

 41   Sub clause 15.8 of the Agreement

 42   See Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia Australian Manufacturing Workers' Union v Main People Pty Ltd [2015] FWCFB 4467 at 39(3)

 43   Written submission at [17]

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