DECISION

Fair Work Act 2009
s.185—Enterprise agreement

Moolarben Coal Operations Pty Ltd
(AG2017/212)

Application for approval of the Moolarben Coal Operations Pty Limited – Moolarben Underground Mine Enterprise Agreement 2017. BOOT satisfied. Agreement approved.

[1] Moolarben Coal Operations Pty Ltd (the Employer) has applied to the Fair Work Commission (Commission) for approval of an enterprise agreement known as the Moolarben Coal Operations Pty Limited – Moolarben Underground Mine Enterprise Agreement 2017 (Enterprise Agreement). The application was made pursuant to s.185 of the Fair Work Act 2009 (Cth) (Act).

[2] The Enterprise Agreement is a single enterprise agreement and is not a greenfields agreement. It covers employees of the Employer engaged at the Moolarben underground mine (the Underground Mine) “who would otherwise be covered by Schedule A of the Black Coal Mining Industry Award 2010” 1 (Black Coal Award).

[3] Employees engaged in the Moolarben open cut mine are covered by the Moolarben Coal Operations Pty Ltd – Moolarben Open Cut Mine Enterprise Agreement 2015. Employees engaged in the Moolarben coal handling preparation plant are covered by the Moolarben Coal Operations Pty Ltd – Moolarben Coal Handling and Preparation Plant (CHPP) Enterprise Agreement 2015.

[4] The Enterprise Agreement was made with three employees who are covered by it (the Employees). They each voted on 25 January 2017 to approve the Enterprise Agreement. Each of those Employees appointed himself as an employee bargaining representative in connection with the negotiation of the Enterprise Agreement. The Employer intends to employ other employees to work at the Underground Mine once the Enterprise Agreement is approved.

[5] The CFMEU is not a bargaining representative in relation to the Enterprise Agreement. For reasons given on transcript on 22 March 2017, I exercised my discretion pursuant to s.590 of the Act to give the CFMEU an opportunity to be heard in relation to the Employer’s application for approval of the Enterprise Agreement. The CFMEU filed detailed written submissions opposing the application for approval of the Enterprise Agreement and appeared at the hearing held on 3 April 2017.

[6] Each of the Employees gave evidence at the hearing on 3 April 2017, as did Mr Grant Arnold, Human Resources and Health, Safety and Training Manager for the Employer.

Genuinely agreed?

[7] One of the necessary preconditions for approval of the Enterprise Agreement is a requirement that I be satisfied that the Enterprise Agreement has been genuinely agreed to by the employees covered by it. 2

[8] Section 188 of the Act governs when an enterprise agreement has been genuinely agreed to by the employees covered by it.

“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.”

[9] Section 180(5) of the Act requires the employer to 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.

[10] The CFMEU contends that the Commission cannot be satisfied that the Employer complied with s.180(5) of the Act, with the result that the Enterprise Agreement was not genuinely agreed to by the Employees and the application for approval must be refused. The basis for the CFMEU’s contention that the Employer did not comply with its obligations under s.180(5) of the Act is that it did not explain to the Employees that they could be prosecuted for a breach of the Enterprise Agreement if they failed to comply with their obligations under it, including their obligation to comply with all of their Employer’s safety policies and procedures. 3 I do not accept this argument. In my view, taking reasonable steps to ensure that the terms of an enterprise agreement, and the effect of those terms, are explained to the relevant employees does not extend to explaining to those employees the potential consequences of a failure by a person to whom the enterprise agreement applies to comply with their obligations under the enterprise agreement. That is, there is a distinction between explaining the terms and their effect, on the one hand, and explaining possible consequences of failing to comply with a term, on the other hand. The former task falls within the scope of the obligation imposed by s.180(5), but the latter does not.

[11] I am satisfied on the basis of the evidence given by Mr Arnold that the Employer took all reasonable steps to ensure that the terms of the Enterprise Agreement, and the effect of those terms, were explained to the Employees and the explanation was provided in an appropriate manner taking into account the particular circumstances and needs of the Employees. Those steps included holding six bargaining meetings with the Employees, explaining the draft terms and conditions, together with their effect, to the Employees on 9 December 2016, and explaining the final version of the terms and conditions, together with their effect, to the Employees on 16 January 2017.

[12] The CFMEU also contends that the Employer failed to comply with its obligation under s.180(2) of the Act to take all reasonable steps to ensure that, during the access period, the Employees are either given a copy of the written text of the Enterprise Agreement and any other material incorporated by reference in the Enterprise Agreement or the Employees have access, throughout the access period, to a copy of those materials.

[13] There is no dispute and I am satisfied on the evidence that the Employees were, during the access period, given a copy of the written text of the Enterprise Agreement. The issue in this case concerns material incorporated by reference in the Enterprise Agreement.

[14] Clause 4.1(f) of the Enterprise Agreement imposes an obligation on employees to comply with “all MCO safety policies and procedures”. I accept that this clause incorporates by reference in the Enterprise Agreement the Employer’s safety policies and procedures. 4 The Employer accepts that copies of such policies and procedures were not provided to the Employees during the access period.

[15] I accept Mr Arnold’s evidence that the Employees had access, throughout the access period, to a copy of the Employer’s safety policies and procedures. The Employees were trained in those policies and procedures during their induction in the Underground Mine and they were accessible to the Employees, throughout the access period, in the following ways:

(a) the Employees could access such documents on the Employer’s intranet at any time;

(b) the Employees could ask the control room for copies of such documents; and

(c) the Employees could ask their supervisor or any manager for copies of such documents.

[16] I do not accept the CFMEU’s argument that the Employees did not have access, or reasonable steps were not taken to ensure they had access, to the safety policies and procedures because the Employees work underground most of the time and no computers are located underground. The Employees could have accessed the Employer’s computers located on the surface of the mine, including during work hours. The Employees commence and finish work at the surface of the mine, where they participate in meetings and attend to other matters. They could have accessed the work computers at those times. Each of the Employees is literate and can use a computer. The Employees could also have contacted the control room, their supervisor or manager during work hours and asked for copies of the safety policies and procedures. I am further satisfied that the Employees had access at the relevant time to the legislation referred to in the Enterprise Agreement, 5 for such legislation is publicly available on the internet and literate persons who can use computers, including the Employees, can readily obtain copies of the legislation.

[17] I asked the three Employees who voted on the Enterprise Agreement a number of questions at the hearing to satisfy myself that they genuinely agreed to it. The answers to my questions revealed that each of the three Employees was employed by the Employer to work at the Underground Mine in early to mid 2016; they were each employed by the Employer during negotiations for the Enterprise Agreement, at the time it was voted on, and remain so employed; the Enterprise Agreement will cover and apply to each of them if it is approved; each of the Employees works in a classification covered by the Enterprise Agreement and will have their rate of pay and terms and conditions governed by the Enterprise Agreement if it is approved, with the result that they had, and continue to have, a “stake” in the Enterprise Agreement; 6 they each understand that they are the only three non-staff employees employed by the Employer at the Underground Mine, and they were selected for employment at the time when the Enterprise Agreement was made because they are good workers and live locally and therefore have an interest in the success of the Underground Mine. At the time of the hearing the Employer was using contractors and staff employees to work with the three Employees in the Underground Mine. The Employer intends to employ other non-staff employees to work in the Underground Mine once it has an approved enterprise agreement applying at the Underground Mine.

[18] On the basis of the evidence adduced in support of the application for approval of the Enterprise Agreement from Mr Arnold and the three Employees, I am satisfied that the Enterprise Agreement was genuinely agreed to by the Employees.

Better off overall test (BOOT)

Legal principles

[19] I must be satisfied that the Enterprise Agreement passes the BOOT before I can approve it. 7 Section 193(1) of the Act provides that an enterprise agreement passes the BOOT if the Commission is satisfied, as at the test time, that each award covered employee, and each prospective award covered employee, for the enterprise agreement would be better off overall if the enterprise agreement applied to the employee than if the relevant modern award applied to the employee. The “test time” is when the application for approval of the enterprise agreement is made.8

[20] In Armacell Australia Pty and Others 9 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.”

[21] The BOOT is not applied as a line by line analysis. It is a global test requiring consideration of advantages and disadvantages to award covered employees and prospective award covered employees. An enterprise agreement may pass the test even if some award benefits have been reduced, as long as overall those reductions are more than offset by the benefits of the enterprise agreement. 10

[22] The application of the BOOT is a matter that involves the exercise of discretion, and it involves a degree of subjectivity or value judgement. 11

Relevant facts

[23] The “test time” for the Enterprise Agreement is 27 January 2017.

[24] The Black Coal Award covers the employees covered by the Enterprise Agreement and is the relevant modern award to be considered for the purpose of determining whether the Enterprise Agreement passes the BOOT.

Employer BOOT submissions

[25] The Employer’s statutory declaration (Form F17) made in support of its application for approval of the Enterprise Agreement identifies terms and conditions of the Enterprise Agreement which it contends are (a) more and (b) less beneficial to employees than the Black Coal Award. The Employer also made detailed written and oral BOOT submissions at the hearing of this matter. I have had regard to those submissions and the Employer’s Form F17 in deciding this matter.

CFMEU BOOT submissions

[26] In summary, the CFMEU submits that the following provisions in the Enterprise Agreement are less beneficial for an employee compared to the relevant provision in the Black Coal Award:

(a) the CFMEU submits that the individual flexibility agreement clause in the Enterprise Agreement (clause 1.5) is less beneficial to employees than clause 7 of the Black Coal Award because:

(i) the Black Coal Award limits the making of an individual flexibility agreement to 5 items, whereas there is no limitation on the terms of the Enterprise Agreement that may be the subject of an individual flexibility agreement. The narrower scope for making an individual flexibility agreement under the Black Coal Award means, so it is contended, less potential for abuse;

(ii) under the Enterprise Agreement, there is no prohibition on the making of an individual flexibility agreement prior to the commencement of employment, whereas the Black Coal Award limits the making of an individual flexibility agreement to an employee who has commenced employment. The CFMEU contends that the prescription on making an individual flexibility agreement prior to the commencement of employment under the Black Coal Award adds a critical safeguard for employees; and

(iii) under the Enterprise Agreement, an individual flexibility agreement can be terminated on 28 days’ notice or as otherwise agreed, whereas the Black Coal Award requires 13 weeks’ notice unless there is a written agreement to terminate. The CFMEU submits that under the Black Coal Award provision an employee retains the benefits of an individual flexibility agreement for longer than would otherwise be the case;

(b) the CFMEU submits that the hours, overtime and rosters provisions in the Enterprise Agreement (clause 3.1) are less beneficial to employees than the relevant clauses in the Black Coal Award (clauses 17, 21 and 22) because:

(i) under the Enterprise Agreement, the Employer has total discretion over the setting of rosters of shifts up to 12.5 hours per day, including the start and finish times (clause 3.1.1(d) and (e)), whereas under the Black Coal Award shifts in excess of 10 ordinary hours can only be worked by agreement and the starting and finishing times of shifts in excess of 10 ordinary hours must be fixed by agreement (clause 23.1(b) and 23.2). The CFMEU contends that where employees do not agree to shifts in excess of 10 ordinary hours, they would be entitled to overtime for any hours worked in excess of 10 hours per shift under the Black Coal Award, but they are not so entitled under the provisions of the Enterprise Agreement. Further, the CFMEU submits that employees have control over the establishment of start and finish times on shifts with ordinary hours in excess of 10 under the Black Coal Award, but they do not have any such control under the Enterprise Agreement;

(ii) under the Enterprise Agreement, the start and finish place for a shift is the “allocated muster point” as determined by the Employer (clause 3.1.6(a)), whereas the start and finish place for a shift for Underground Workers under the Black Coal Award must be on the “surface” (clause 23.4(b)). The CFMEU submits that the Black Coal Award requires the start and finish place for a shift to be on the “surface”, but under the Enterprise Agreement the Employer could determine the start and finish place to be underground, at the coalface or elsewhere, with the result that the time taken for the employees to get from the surface to the commencement and finishing place of work would not be part of the employees’ ordinary hours of work;

(iii) an employee working a shift of between 10 and 10.5 hours in duration is entitled to two 30 minute paid meal breaks under the Black Coal Award (clause 24.1), whereas they are only entitled to one 30 minute paid meal break under the Enterprise Agreement (clause 3.1.7(e));

(iv) under the Black Coal Award, where an employee works non-rostered overtime of more than 1.5 hours past their rostered shift then the employee will, unless agreed otherwise, before starting this overtime be allowed at least 30 minutes for a meal without deduction of pay (clause 17.8(a)). No such benefit is provided under the Enterprise Agreement;

(v) under the Black Coal Award, where an employee works non-rostered overtime they are entitled to be supplied with a meal or paid a meal allowance (clause 17.8(b) and (c)). No such benefit is provided under the Enterprise Agreement;

(vi) under the Black Coal Award, an employee’s place in a roster will not be changed, except where one week’s notice of any change is given to the employee or where less than one week’s notice is given, the employee is paid at overtime rates for all work from the time of change of shift until a week’s notice would have expired (clause 23.5). No such benefit is provided under the Enterprise Agreement;

(vii) under the Black Coal Award, where permanent day workers are required to work shift work for at least three consecutive days, they are entitled to overtime rates for the first shift. Where such employees are required to work shift work for a period less than three consecutive days, they are entitled to overtime rates for each shift (clause 22.3). No such benefit is provided under the Enterprise Agreement;

(viii) under the Black Coal Award, where overtime is a worked on a Saturday or Sunday, the employee must be paid a minimum of three hours at the appropriate rate (clause 17.3). No such benefit is provided under the Enterprise Agreement; and

(ix) under the Black Coal Award, provision is made for call backs (clause 17.7). No such benefit is provided under the Enterprise Agreement;

(c) the CFMEU submits that the redundancy provision in the Enterprise Agreement is less beneficial than the Black Coal Award because:

(i) under the Enterprise Agreement, employees with less than one year’s service are not entitled to any redundancy pay (clause 3.2), whereas under the Black Coal Award employees with less than one year’s service are entitled to a minimum payment of two weeks ordinary pay (clause 14.4(b)); and

(ii) under the Enterprise Agreement, there is no minimum notice provision for an employee who has been made redundant, whereas under the Black Coal Award redundant employees are entitled to a minimum of four weeks’ notice of termination (clause 13.4);

(d) the CFMEU submits that the stand down provision (clause 3.3) of the Enterprise Agreement is less beneficial to employees than the Black Coal Award because the Enterprise Agreement entitles the Employer to stand down an employee in certain circumstances, whereas there is no counterpart clause in the Black Coal Award;

(e) the CFMEU submits that the Enterprise Agreement is less beneficial to employees than the Black Coal Award because the Enterprise Agreement makes compliance by employees with the relevant directions, policies and procedures a term liable to a penalty for a breach (clause 4.1), whereas the Black Coal Award has no such provision;

(f) the CFMEU submits that the Enterprise Agreement is less beneficial to employees than the Black Coal Award because the Enterprise Agreement establishes a six-month probationary period (clause 4.2.2), whereas the Black Coal Award has no such provision;

(g) the CFMEU submits that the part-time employment provisions of the Enterprise Agreement are less beneficial to employees than the Black Coal Award because:

(i) the Enterprise Agreement permits a part-time employee’s hours of work per week to be greater than 35 as long as the average is less than 35 (clause 4.2.3(a)), whereas the Black Coal Award stipulates that a part-time employee’s ordinary hours must be less than 35 per week (clause 10.3(a)(i));

(ii) the Black Coal Award requires the hours that are worked for a part-time employee to be reasonably predictable (clause 10.3(a)(ii)), agreed at the time of commencing employment and a specified list the hours worked each day, which days of the week the hours are to be worked and the actual start and finish times (clause 10.3(b)), and any variation to part-time hours to be by agreement (clause 10.3(c)). In contrast, the Enterprise Agreement permits great variation in hours of work as determined by the Employer (clause 4.2.3(a)); and

(iii) the Black Coal Award provides that all time worked in excess of the hours mutually agreed will be overtime and paid for at overtime rates (clause 10.3 (d));

(h) the CFMEU submits that the casual employment provisions of the Enterprise Agreement are less beneficial to employees than the Black Coal Award because the Enterprise Agreement permits employees to be engaged as casual employees and be paid a 25% loading for ordinary hours (clause 4.2.2), whereas there is no counterpart provision for production and engineering employees under the Black Coal Award. The CFMEU submits that casual employment is a form of employment with less job security for employees than the available forms of employment under the Black Coal Award;

(i) the CFMEU submits that the abandonment of employment clause in the Enterprise Agreement (clause 4.5) is less beneficial to employees than the Black Coal Award. The Enterprise Agreement provides for termination of employment on the basis of abandonment of employment, in which case no period of notice is required. The CFMEU submits that this provision is less beneficial for employees because it provides the Employer with an enforceable right that does not exist under the Black Coal Award and the Enterprise Agreement removes the right on the part of an employee to a period of notice or payment in lieu;

(j) the CFMEU submits that the annual leave provisions in the Enterprise Agreement (clause 2.5) are less beneficial to employees than the Black Coal Award. In particular, the CFMEU points to the fact that clause 2.5.1 of the Enterprise Agreement confines the entitlement to six weeks’ annual leave to seven day shift workers, whereas clause 25.2 of the Black Coal Award provides that an employee who works a roster requiring ordinary hours on public holidays and not less than 272 ordinary hours on a Sunday is entitled to six weeks’ leave as well as seven day shift workers;

(k) the CFMEU submits that the personal leave provisions in the Enterprise Agreement (clause 2.6) are less beneficial to employees than the Black Coal Award because clause 26.4 of the Black Coal Award provides that where an employee is absent on personal leave for less than half a day there is no deduction made, whereas there is no equivalent clause in the Enterprise Agreement;

(l) the CFMEU submits that the Enterprise Agreement is less beneficial to employees than the Black Coal Award because allowances may be payable to employees under the Black Coal Award, such as a first aid attendance allowance of $3.50 per shift and an incidence based dirty work allowance of $1.79 per shift, whereas the hourly rates payable to employees under the Enterprise Agreement “represents compensation for all ordinary time worked and are inclusive of all other payments with the exception of Bonus Payments referred to at clause 2.2.1 and Allowances at clause 2.2.2 of this Agreement” (clause 2.1.2(b)); and

(m) because the only extra payments with respect to ordinary hours of work for a non-trades miner under the Enterprise Agreement are the bonus (if any) and a shift allowance (if an employee works an afternoon or night shift), in certain circumstances employees will receive less pay under the Enterprise Agreement than they would if they were paid under the Black Coal Award. For example if an employee worked 12 hours a day on day shift from Friday to Sunday inclusive, under the agreement they would be paid $1,184 12, whereas under the Black Coal Award they would be paid $1,377.50.13 The CFMEU contends that this gap becomes larger if one takes into consideration the rates of pay in the Black Coal Award for a Mineworker – Advanced and Mineworker – Specialised. In the “translating classifications” table in the attachment to the form F17 declaration, the Employer states that both of these classifications will be paid at the same rate as the Mineworker under the Black Coal Award, yet they are on higher wages under the Black Coal Award. In that regard, a Mineworker – Advanced is on an hourly rate of $24.89 under the Black Coal Award. Applying the same formula as set out previously in this subparagraph, a Mineworker – Advanced would be paid $1,443.62 and a Mineworker – Specialised would be paid $1,564.65 under the Black Coal Award. The CFMEU submits that the Bonus Scheme under the Enterprise Agreement cannot be taken into account for the purpose of determining the BOOT because payments under that scheme are at the “absolute discretion” of the Employer.

More beneficial terms

[27] The table below shows a comparison between the rates of pay under the Enterprise Agreement compared to those under the Black Coal Award:

[28] Employees appointed as tradespersons will receive $50 per week “Tool/Trade Allowance” under the Enterprise Agreement (clause 2.2.2(c)). For a 35 hour week this equates to an additional $1.43 per hour. This would increase the percentage increase under the Enterprise Agreement compared to the Black Coal Award to 40.8% (when using the Mineworker classification for comparison purposes).

[29] These higher rates of pay under the Enterprise Agreement compared to the Black Coal Award flow through to all monetary entitlements based on the classification rate of pay under the Enterprise Agreement, including annual leave, personal and long service leave, overtime, casual loadings, and shift allowances. I have made specific reference to some of these items individually below, but it is important to recognise and give weight in an overall BOOT assessment to the flow on effects of higher rates of pay. 14

[30] One of the major points of dispute between the Employer and the CFMEU on the question of whether the Enterprise Agreement passes the BOOT relates to payment for work undertaken on weekends and work in excess of ordinary hours. The CFMEU contends that in certain circumstances employees would be paid less under the Enterprise Agreement compared to the Black Coal Award. 15 The CFMEU’s submission in this regard is focused on clause 2.1.2(b) of the Enterprise Agreement, which provides that rates of pay in the Enterprise Agreement “represent compensation for all ordinary time worked and are inclusive of all other payments with the exception of Bonus Payments referred to at clause 2.2.1 and Allowances at clause 2.2.2 of this Agreement.”

[31] The CFMEU submits that the effect of clause 2.1.2(b) is that the weekend penalty rates in clause 3.1.3(b), the overtime rates in clauses 3.1.3(a), (c) and 3.1.4, and public holiday penalties in clause 2.8.2 have no application. I reject this argument. Enterprise Agreements must be read as a whole. 16 The CFMEU’s construction would leave these other clauses with no work to do. In my view, the reference in clause 2.1.2 of the Enterprise Agreement to the rates being “compensation for all ordinary time worked ..” was objectively intended to indicate that allowances such as a disability allowance under the Black Coal Award are not payable under the Enterprise Agreement. I am satisfied that, on the proper construction of the Enterprise Agreement, the weekend penalty rates in clause 3.1.3(b), the overtime rates in clauses 3.1.3(a), (c) and 3.1.4, and public holiday penalties in clause 2.8.2 confer on employees the right to receive payment in accordance with those clauses. Accordingly, the comparison between Level 2 Mineworker working 12 hours of day work on each of Friday to Sunday is as follows:

[32] As is apparent from the example set out in the table above, all work on a Saturday under the Enterprise Agreement is paid at double time, whereas the first four hours of work on a Saturday under the Black Coal Award is paid at time and a half, with double time applying to any subsequent hours worked on a Saturday. Further, overtime rates under the Enterprise Agreement are double time for rostered and un-rostered overtime (clauses 3.1.3(c) and 3.1.4), which is higher than the Black Coal Award (clause 17.2(a)). The Enterprise Agreement is, in these respects, more beneficial to employees than the Black Coal Award. Like many benefits under an enterprise agreement or an award, these benefits are contingent in the sense that they do not arise unless the employee works at the relevant times.

[33] The Enterprise Agreement provides for a 2% increase to rates of pay 16 months after approval and a further 2% increase 32 months after approval. These increases in rates can be taken into account in applying the BOOT. 17 These increases were known at the “test time”; they apply to classifications under the Enterprise Agreement. In contrast, it is not, and was not at the “test time”, known what increase may be made to the rates of pay under the Black Coal Award over the life of the Enterprise Agreement. Any increases arising from Annual Wage Reviews by the Commission’s Expert Panel would not be likely to significantly reduce the margin of difference between pay rates under the Black Coal Award and the Enterprise Agreement.

[34] Bonuses may be paid to employees under clause 2.2 of the Enterprise Agreement. I do not accept the CFMEU’s contention that bonus payments under that scheme are at the “absolute discretion” of the Employer. However, I accept that there is scope under the bonus clause in the Enterprise Agreement for a bonus of much less than $28,000 per annum, or even nil bonus, to be paid to employees in particular circumstances. In my view, the bonus provisions in the Enterprise Agreement provide a contingent potential benefit to employees which is not provided for in the Black Coal Award, and ought be given due weight in applying the BOOT.

[35] The Enterprise Agreement provides for accident “make-up” pay (clause 2.3). This is a contingent benefit in that it only applies if an employee is incapacitated and cannot work for some period of time. The amount of make-up pay to be paid to employees under clause 2.3 of the Enterprise Agreement for the first four weeks, and then the next seventy four weeks, exceed the entitlements under the Black Coal Award (clause 18.2). In addition, any bonus payments under clause 2.2 of the Enterprise Agreement are paid for the first 39 weeks of accident pay. Accordingly, the make-up pay provisions of the Enterprise Agreement are more beneficial to employees than the Black Coal Award.

[36] The Enterprise Agreement provides for employees on defence services leave to receive “make-up” pay up to a maximum of four weeks (clause 2.13). There is no such benefit under the Black Coal Award or any applicable legislation. The Enterprise Agreement is therefore more beneficial to employees than the Black Coal Award in this respect.

[37] The provision of “Easter Tuesday” as a public holiday under the Enterprise Agreement (clause 2.8.1(a)) is more beneficial to employees than the Black Coal Award (clause 27).

Less beneficial terms

[38] The casual employment provisions of the Enterprise Agreement are less beneficial to employees than the Black Coal Award for the reasons set out in paragraph [26(h)] above.

[39] For the reasons set out in paragraph [26(b)(i)] above, the shift length and starting time provisions of the Black Coal Award are more beneficial to employees than the Enterprise Agreement.

[40] For the reasons set out in paragraphs [26(b)(iii), (iv) and (v)] above, the meal break provisions of the Black Coal Award are more beneficial to employees than the Enterprise Agreement.

[41] The Black Coal Award is more beneficial to employees than the Enterprise Agreement in relation to the matters, and for the reasons, set out in paragraphs [26(b)(vi), (vii), (viii) and (ix)] above.

[42] The Enterprise Agreement is less beneficial to employees than the Black Coal Award insofar as allowances are payable to employees under the Black Coal Award in certain circumstances, such as a first aid attendance allowance of $3.50 per shift and an incidence based dirty work allowance of $1.79 per shift, whereas they are not payable to employees under the Enterprise Agreement. The only allowances payable to employees under the Enterprise Agreement are those set out in clause 2.2.2 of the Enterprise Agreement.

[43] The Enterprise Agreement imposes an obligation on employees to comply with a range of the Employer’s directions, policies and procedures (clause 4.1); the Black Coal Award has no such provision. Although the employees to whom the Enterprise Agreement applies would be required to comply with lawful and reasonable directions of the Employer, including lawful and reasonable policies and procedures, even if clause 4.1 were not included in the Enterprise Agreement, the fact that such an obligation is included as a term of the Enterprise Agreement means that employees are exposed to the possibility of being prosecuted for a breach of clause 4.1 of the Enterprise Agreement, in respect of which a penalty may be imposed or other relief granted against the employee’s interests. Notwithstanding the fact that I do not consider it likely that employees to whom the Enterprise Agreement applies will be prosecuted for a breach of clause 4.1, there remains the possibility of such action. Given that employees are not exposed to the same risks under the Black Coal Award, I am satisfied that the Enterprise Agreement is less beneficial to employees than the Black Coal Award insofar as the Enterprise Agreement makes compliance by employees with the relevant directions, policies and procedures a term liable to a penalty for a breach (clause 4.1). I will place some weight, but not a significant amount, on this matter when making my overall assessment of whether an employee would be better off under the Enterprise Agreement compared to the Black Coal Award.

[44] The stand down provision (clause 3.3) of the Enterprise Agreement gives the Employer a right to stand down employees without pay in certain circumstances. The rights conferred on the Employer by this clause extend beyond the Employer’s statutory right to stand down employees. 18 There is no stand down clause in the Black Coal Award. It follows that the Enterprise Agreement is less beneficial to employees than the Black Coal Award insofar as it deals with the subject of standing down employees.

Partly more beneficial and partly less beneficial terms

[45] At the time the application for approval of the Enterprise Agreement was made, the Black Coal Award provided for three weeks’ retrenchment/severance pay per year of service. There is now a cap on such payments under the Black Coal Award for employees other than those who have completed at least 15 years’ service. 19 Because the “test time” for this Enterprise Agreement is 27 January 2017, I will not take those amendments to the Black Coal Award into account for the purpose of assessing the BOOT in this matter.

[46] The redundancy entitlement in the Enterprise Agreement of three weeks’ pay per year of completed service reflects the entitlement under the Black Coal Award as at 27 January 2017. In that respect, the two instruments provide the same benefit in terms of “weeks’ pay”. However, the Enterprise Agreement pays higher rates than the Black Coal Award, so the redundancy benefits under the Enterprise Agreement are more beneficial to employees compared to the Black Coal Award. The Black Coal Award provides for a minimum of four weeks’ notice of termination on redundancy. There is no such minimum notice period in the Enterprise Agreement (clause 4.3.2). Accordingly, the notice of termination on redundancy provisions are more beneficial under the Black Coal Award than under the Enterprise Agreement for employees with less than five years’ service.

[47] The Employer has given an undertaking to pay an employee with less than two years of completed service four weeks’ redundancy pay, in accordance with the National Employment Standards of the Act. As a result of that undertaking, employees with less than two years’ service receive a higher number of weeks’ redundancy pay under the Enterprise Agreement, having regard to the undertaking, than they would under the Black Coal Award. Once employees reach two years’ service or more, they would, as at the test time, receive the same number of weeks’ redundancy pay under the Enterprise Agreement compared to the Black Coal Award, but the payment under the Enterprise Agreement would be higher by reason of the higher rates of pay under the Enterprise Agreement compared to the Black Coal Award.

[48] The annual leave provisions in the Enterprise Agreement (clause 2.5) are less beneficial to employees than the Black Coal Award insofar as clause 2.5.1 of the Enterprise Agreement confines the entitlement to 6 weeks’ annual leave to seven day shift workers, whereas clause 25.2 of the Black Coal Award provides that an employee who works a roster requiring ordinary hours on public holidays and not less than 272 ordinary hours on a Sunday is entitled to 6 weeks’ leave as well as seven day shift workers. Otherwise the annual leave provisions of the Enterprise Agreement are more beneficial to employees than the Black Coal Award because payments made to employees in respect of annual leave under the Enterprise Agreement are at the higher rates of pay under the Enterprise Agreement compared to the Black Coal Award.

[49] Personal/carer’s leave is another contingent benefit provided to employees under both the Enterprise Agreement and the Black Coal Award. The personal leave provisions in the Enterprise Agreement (clause 2.6) are less beneficial to employees than the Black Coal Award insofar as clause 26.4 of the Black Coal Award provides that where an employee is absent on personal leave for less than half a day there is no deduction made, whereas there is no equivalent clause in the Enterprise Agreement. However, personal/carer’s leave is paid at the higher rates of pay under the Enterprise Agreement compared to the Black Coal Award. Further, the Black Coal Award provides that personal leave is paid in accordance with the NES, namely at the base rate of pay for the ordinary hours of work. 20 The Enterprise Agreement is more beneficial to employees because it provides for payment at the “ordinary time” rate for the “rostered shift length”, which includes payment for rostered overtime at the “ordinary time rate” (clause 2.6.1(c)). The personal leave provisions of the Enterprise Agreement are also more beneficial to employees compared to the Black Coal Award because they give employees the option to salary sacrifice personal leave in certain circumstances (clause 2.6.3); there is no equivalent provision in the Black Coal Award.

Neutral terms

[50] In my view, the individual flexibility term in the Enterprise Agreement is neither more nor less beneficial to employees compared to the Black Coal Award. As to the submissions made by the CFMEU in paragraph [26(a)] above:

(a) the fact that there is no limitation on the terms of the Enterprise Agreement that may be the subject of an individual flexibility agreement, whereas the Black Coal Award limits the making of an individual flexibility agreement to 5 items, does not, in my view, make the Enterprise Agreement provision less beneficial to employees. It may be beneficial for an employee to have an individual flexibility agreement with a wide scope. I am satisfied that the safeguards built into subparagraph (c) of clause 1.5 of the Enterprise Agreement protect employees against the risk of abuse of individual flexibility agreements with a broad scope;

(b) unlike the Black Coal Award, there is no express prohibition in the Enterprise Agreement on the making of an individual flexibility agreement prior to the commencement of employment. However, on the proper construction of the Enterprise Agreement, particularly the references to “employee” in clause 1.5 and clause 1.2, I am of the view that a person must be an employee of the Employer to make an individual flexibility agreement pursuant to clause 1.5 of the Enterprise Agreement. Even if that were not the case, I would be satisfied that the safeguards built into subparagraph (c) of clause 1.5 of the Enterprise Agreement protect prospective employees against the risk of being pressured into making an individual flexibility agreement; and

(c) under the Enterprise Agreement, an individual flexibility agreement can be terminated on not more than 28 days’ notice or as otherwise agreed, whereas the Black Coal Award requires 13 weeks’ notice unless there is a written agreement to terminate. A clause in an enterprise agreement requiring a party to an individual flexibility agreement to give more than 28 days’ notice of termination would be of no effect. 21 In any event, given that the notice period applies to termination by both employers and employees, I do not consider that a period of not more than 28 days’ notice is less beneficial to employees than 13 weeks’ notice.

[51] In light of the undertaking given by the Employer in relation to the muster point being on the surface of the Underground Mine, clause 3.1.6(a) of the Enterprise Agreement is not more or less beneficial to employees than clause 23.4(b) of the Award.

[52] In light of the undertakings given by the Employer in relation to part-time employees, particularly those aspects of the undertakings which require agreement on the part of the part-time employee, I am of the view that the part-time employment provisions of the Enterprise Agreement are not more or less beneficial to employees than the part-time employment provisions of the Black Coal Award.

[53] The Enterprise Agreement establishes a six-month probationary period (clause 4.2.2). The notice period during the probationary period is consistent with the NES. 22 The six month duration of the probationary period is also consistent with the minimum employment period in the unfair dismissal provisions of the Act.23 Although the Black Coal Award does not include a probation clause, the probation clause in the Enterprise Agreement does not impose any obligation on, or any detriment to, an employee over and above the Act. I therefore consider the probation clause to be neutral for the purposes of the BOOT.

[54] As to the abandonment of employment clause in the Enterprise Agreement (clause 4.5), subclause 4.5(b) is of no effect as a result of the undertaking given by the Employer. Subclause 4.5(a) provides that an absence for a continuous period exceeding three consecutive working days without the consent of the Employer and without notification to the Employer is prima facie evidence that the employee has abandoned their employment. Whether the Employer acts on such prima facie evidence is a different question. The subclause does not deem any such absence to be an abandonment of employment, nor does it, without more, terminate the employment of the employee. The subclause imposes an obligation on the Employer to make reasonable attempts to contact the employee before terminating their employment. Having regard to these features of clause 4.5(a) of the Enterprise Agreement, I do not consider it to be less or more beneficial to employees than the Black Coal Award, which does not contain any abandonment of employment provisions.

[55] In my view, the step-up allowance in the Enterprise Agreement (clause 2.2.2(b)) is, on balance, neutral. Depending on a range of circumstances, it may be more or less beneficial to employees than the mixed function provision in the Black Coal Award (clause 16.2).

[56] I consider the clauses of the Enterprise Agreement and/or the Black Coal Award that I have not specifically addressed in this decision to be either neutral or of little weight in my assessment of the BOOT.

Conclusion on BOOT

[57] I have had regard and given due weight to the terms of the Enterprise Agreement which are more beneficial for an employee and the terms which are less beneficial for an employee compared to the Black Coal Award, as identified and summarised in paragraphs [27] to [56] above. Having regard to those matters, my overall assessment is that, as at the test time, each award covered employee, and each prospective award covered employee, for the Enterprise Agreement would be better off overall if the Enterprise Agreement applied to the employee than if the Black Coal Award applied to the employee.

Non-compliance with National Employment Standards (NES)

[58] The CFMEU submits that the Enterprise Agreement is inconsistent with the National Employment Standards in the following respects:

(a) First, clause 2.5.2(a) of the Enterprise Agreement entitles an employee to annual leave upon four weeks’ notice and subject to the Employer refusing to grant annual leave where, in its opinion, the operations of the mine will be affected. The CFMEU contends that this clause is inconsistent with s.88(2) of the Act, which provides that “the employer must not unreasonably refuse to agree to a request by the employee to take paid annual leave.” There is, so the CFMEU contends, a gap between the Employer’s opinion as to operational requirements and what may, for the purpose of the National Employment Standards, be “reasonable”. It is submitted that, in its current form, the Enterprise Agreement applies an effective right of veto over a reasonable request from an employee to take annual leave, and provides no avenue for effective redress; and

(b) Secondly, clause 4.5 of the Enterprise Agreement is an abandonment of employment provision. It defines the term and allows the Employer to terminate the employment of an employee as from the last day of work or the last day upon which the authorised leave was given. In Bienias v Iplex Pipelines Australia Pty Limited, 24 the Full Bench of the Commission held that an abandonment of employment clause in a modern award which, inter alia, provided that termination operated from the last day of work or approved absence was inconsistent with the National Employment Standards. The Full Bench said:

“The effect of the clause operating this way would be to deprive an employee of both written notice of the day of termination in s 117(2) and, except in the case of serious misconduct, the receipt of notice or compensation in lieu is required in ss 117(2) and (3).”

[59] These matters have been addressed by the undertakings given by the Employer. 25

Undertakings

[60] The Employer (MCO) has provided the following written undertakings (the Undertakings) pursuant to s.190 of the Act in relation to the Enterprise Agreement:

(a) in respect of clause 1.5(c), MCO will give the individual employee a copy of the flexibility agreement within 14 days after it is agreed;

(b) in respect of clause 2.2.2(a), the terms “afternoon shift” and “night shift” are taken to have the meaning of those terms in clause 22 of the Black Coal Award as amended from time to time;

(c) in respect of clause 2.5.2(a), the clause be taken to be amended to delete the last sentence that reads: “The leave will be granted unless in MCO’s opinion the operations at the Mine will be affected”, and a new sentence taken to be inserted in its place to read as follows: “MCO must not unreasonably refuse to agree to a request by the employee to take paid annual leave”, conformably with section 88(2) of the Act;

(d) in respect of clause 2.8.2(c), the last sentence that reads “if an employee fails to provide such verification they are not entitled to payment for the public holiday”, is of no effect and will not be relied upon by MCO;

(e) in respect of clause 3.1.6(a), the “allocated muster area” was located on the surface of the Mine at the time of the vote for the Enterprise Agreement, and will remain on the surface of the Mine while the Enterprise Agreement remains in operation;

(f) in respect of clause 3.2(a), the entitlement to redundancy pay for an employee with less than two years of completed service is four weeks’ pay, in accordance with the National Employment Standards of the Act;

(g) in respect of clause 4.2.3:

(i) at the time of engagement, MCA and the part-time employee will agree on the regular hours to be worked part-time;

(ii) the regular hours to be worked may be varied by agreement between MCO and the part-time employee, from time to time; and

(iii) all time worked in excess of the mutually agreed hours by the part-time employee will be overtime and paid at the rates under clauses 3.1.3(c) and 3.1.4 of the Enterprise Agreement; and

(h) in respect of clause 4.5(b), the text of the clause be taken to be deleted, and new text taken to be inserted in its place to read as follows: “An employee whose employment is terminated for abandonment of employment will be given written notice of the day of the termination, and will be entitled to payment in lieu of notice in accordance with clauses 4.3.2 and 4.3.3”, conformably with sections 117(1) and (2) of the Act.

[61] A signed copy of the Undertakings is attached in Annexure A to this decision.

[62] In accordance with s.190(3) of the Act, I may only accept the Undertakings if I am satisfied that the effect of accepting the Undertakings is not likely to:

(a) cause financial detriment to any employee covered by the Enterprise Agreement; or

(b) result in substantial changes to the Enterprise Agreement.

[63] It is necessary to consider the number and breadth of the Undertakings in determining whether they would result in substantial changes to the Enterprise Agreement. 26

[64] There is no dispute in this case, and I am satisfied that, accepting the Undertakings would not be likely to cause financial detriment to any employee covered by the Enterprise Agreement. The dispute is whether the effect of accepting the Undertakings is likely to result in substantial changes to the Enterprise Agreement.

[65] In my view, the undertakings in respect of clauses 1.5(c), 2.2.2(a), 3.1.6(a) and 4.2.3 clarify the intended operation of those clauses as agreed to by the Employer and the Employees. They do not result in a significant change to the operations of those clauses, or the Enterprise Agreement.

[66] The undertakings in respect of clauses 2.5.2(a), 2.8.2(c), 3.2(a) and 4.5(b) concern potential inconsistency between those clauses and the NES. To the extent of any such inconsistency, those clauses would not have been enforceable. 27 For that reason, those undertakings do not result in a significant change to the operation of those clauses, or the Enterprise Agreement.

[67] The Undertakings provided by the Employer are not substantial either in number or scope. In my view, they do not result in a “wholesale reshaping” of the Enterprise Agreement. 28

[68] For the reasons set out in the previous four paragraphs, I am satisfied that the effect of accepting the Undertakings, whether considered individually or collectively, would not be likely to cause financial detriment to any employee covered by the Enterprise Agreement or result in substantial changes to the Enterprise Agreement.

[69] The views of each person who the Commission knows is a bargaining representative for the Enterprise Agreement have been sought in relation to the Undertakings.

[70] Pursuant to subsection 190(3) of the Act, I accept the Undertakings.

Conclusion

[71] Subject to the Undertakings, I am satisfied that each of the requirements of ss.186,

187, 188 and 190 as are relevant to this application for approval have been met.

[72] The Enterprise Agreement is approved and, in accordance with s.54 of the Act, will operate from 17 April 2017. The nominal expiry date of the Enterprise Agreement is 16 January 2021.

COMMISSIONER

Appearances:

Sebbens, T for the Applicant

Thomas, A on behalf of the Construction Forestry Mining and Energy Union

Hearing details:

2017.

Newcastle:

April 3.

 1   Clause 1.2(b) of the Enterprise Agreement

 2   s.186(2)(a) of the Act

 3   Clause 4.1(f)(ii) of the Enterprise Agreement

 4   CFMEU v Sparta Mining Services Pty Ltd [2016] FWCFB 7057 at [8] & [16]

 5   For example, the NSW Workers Compensation Act 1997 (see clause 2.3.1 of the Enterprise Agreement)

 6   cf KCL Industries Pty Ltd [2016] FWCFB 3048

 7   s.186(2)(d) of the Act

 8   s.193(6) of the Act

 9   [2010] FWAFB 9985 at [41]

 10   Re Australia Western Railroad Pty Ltd T/A ARG – A QR Company [2011] FWAA 8555 at [8]; NTEIU v University of New South Wales [2011] FWAFB 5163 at [47]

 11   TWU v Jarman Ace Pty Ltd [2014] FWCFB 7097 at [28]

 12   This is calculated on the basis of 35 ordinary hours plus one hour at double time, being 37 paid hours x $32 = $1,184

 13   This is calculated on the basis of a 12 ordinary hours on Friday, 22 paid hours on Saturday (4 x 1.5 = 6 + [8 x 2] = 16 =22) and 24 hours on Sunday (12 hours x 2), giving a total of 58 paid hours. 58 x $23.75 (Level 3 Miner) = $1,377.50

 14   Beechworth Bakery Employee Co Pty Ltd t/a Beechworth Bakery [2016] FWCA 8862 at [68]

 15   See paragraphs [26(l) and (m)] above

 16   AMIEU v Golden Cockerel Pty Ltd [2014] FWCFB 7447 at [19]-[22]

 17   Hart v Coles Supermarkets Australia Pty Ltd and Bi-Lo Pty Ltd [2016] FWCFB 2887 at [18]

 18   Section 524 of the Act

 19   Re Black Coal Mining Industry Award 2010 [2017] FWCFB 584

 20   Section 99 of the Act

 21   Section 202(4) of the Act

 22   Section 117 of the Act

 23   Section 383 of the Act

 24   [2017] FWCFB 38 at [58]; see also Waternish Engineering Pty Ltd [2017] FWC 153 at [9]

 25   See paragraph [46] below

 26   ALDI Foods Pty Ltd v TWU [2012] FWCFB 9298 at [54]

 27   Section 56 of the FW Act

 28   AKN Pty Ltd t/a Aitkin Crane Services [2015] FWCFB 1833

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