[2012] FWA 7336

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FAIR WORK AUSTRALIA

DECISION

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

KBK Security Services and Sentinel Traffic Control Service t/a KBK Enterprises Pty Ltd
(AG2011/14756)

Security services
COMMISSIONER ASBURY	BRISBANE, 27 AUGUST 2012

Sentinel Traffic Control Services Agreement 2011.

Introduction

[1] On 23 December 2011, an application was made under s.185 of the Fair Work Act 2009 (the Act) for approval of the Sentinel Traffic Control Services Enterprise Agreement 2011 (the Agreement). The application was made by KBK Security Services and Sentinel Traffic Control Service trading as KBK Enterprises Pty Ltd, and filed by its representative, Mr Stephen Alexander, of Carroll, Alexander and Associates.

[2] On 6 January 2012, the Australian Workers Union (AWU) made an application pursuant to s.589 of the Act seeking to be heard in relation to the application for approval of the Agreement. That application also sought that Fair Work Australia refuse to approve the Agreement on grounds including that it does not pass the better off overall test and contains provisions allowing unreasonable and/or impermissible deductions from amounts payable to employees.

[3] The application was listed for hearing on 24 January 2012. On 20 January 2012, Mr Alexander corresponded with my Associate and sought a fourteen day adjournment of the hearing to enable discussions to be held with the National Office of the AWU.

[4] No advice was received on the progress of discussions, and on 18 April 2012, my Associate corresponded with Mr Alexander requesting advice as to the progress of negotiations. Mr Alexander responded and said that his client had decided to “hold the whole issue in abeyance and contact FWA when they wish to proceed”. On 19 April 2012 my Associate corresponded further with Mr Alexander and advised that the matter could not be held in abeyance and that it needed to be progressed or withdrawn.

[5] No further contact was received from Mr Alexander until 6 July 2012, when a Notice of Representative Ceasing to Act - Form F54 was received. Mr Alexander advised that Ms Kym Cobby of Sentinel Traffic Control would be in contact to have the matter dealt with.

[6] Thereafter, my Associate had a number of emails and telephone conversations with Ms Cobby during which Ms Cobby intimated that she would withdraw the application for approval of the Agreement. Ms Cobby was provided with a copy of the application filed by the AWU on 6 January 2012. When Ms Cobby failed to take any step to progress or withdraw the application, it was listed for hearing.

Hearing

[7] A hearing into the approval of the Agreement was held on 20 July 2012. At the outset Ms Cobby was informed that the purpose of the hearing was to enable her to hear my concerns and questions about the information provided in the Employer Declaration in Support of Approval of Agreement - Form F17 - signed by Ms Cobby, and the terms of the Agreement. Ms Cobby was also informed that the AWU would be heard in relation to its concerns about the Agreement. Further, Ms Cobby was informed that the hearing was being transcribed and that she had the option of making submissions at the hearing, or at a later date, on receipt of the transcript.

[8] According to the Employer Declaration the relevant modern awards for the application of the better off overall test are:

• Security Services Industry Award 2010



• Building Construction General On-site Award 2010



• Clerks Private Sector Award 2010.

[9] The primary activity of the employer is said to be traffic control and security services. Ms Zoe Angus appeared via telephone on behalf of the AWU. The issues raised by the AWU relate to a comparison between the Agreement and the Building and Construction General On-site Award 2010, and can be summarised as follows:

• The wage rates in the Agreement are in some cases marginally above and in other cases marginally below the rates that employees working under the Agreement would be entitled to receive under the Building and Construction General On-site Award 2010 the Award).



• The agreement wage rates do not adequately compensate for the foregone award terms and conditions. Some instances of detriment for employees compared to the award include but are not limited to:



• Under the award, employees may only be engaged as either full time, part time or casual. Under the agreement, four further “types” of employment are possible, reducing the job security of employees.



• Full time employee hours are averaged over 12 months (16.1(a)) in the agreement, unlike the award weekly averaging (33.1). This has a detrimental impact on employees’ capacity to access paid overtime.



• Part time employees are not entitled to paid overtime under the agreement after their agreed hours (16.1(b) contrast award 13) and hours may be increased unilaterally at the employer’s discretion.



• Casual employees engaged under the agreement are no longer entitled to 4 hours minimum engagement, casual conversion or written offer of expected duration of work.



• All penalty rates have been reduced compared to the award. For example, under the award, overtime commences after 8 hours each day (cl.33.1) and Saturday work is 150% then 200% after 2 hours (cl.37.1).



• Employees working night work would be significantly disadvantaged under the agreement. For example, under the award traffic controllers working permanent night work on a building site receive a loading of at least 50% (see cl.34.1(b) and (d)). Traffic controllers working permanent night shift on civil construction jobs may only be engaged on permanent night shift under specified circumstances (see definition at cl.34.2(a)). Otherwise the work is considered overtime. The agreement provides full discretion to the employer to engage employees on night shift (see cl.20.1.2) at the lowest award rate and without any attendant protections (for example, notice and/or reaching agreement in relation to rosters, paid breaks, overtime rest breaks & meal allowances and extra leave for shift workers). Further, under cl.16(j)(b) and 19.4 of the agreement, it is only the period outside the span of hours which appears to attract the shift loading (compared to the full shift under the award).



• Employees are no longer entitled to numerous allowances including travel and fares, meal allowance, wash-up time and inclement weather.



• Employees are not entitled to industry standards in relation to redundancy. Termination on the grounds of “serious misconduct” is significantly broader than the award, hence represents a detriment. The stand down provision also constitutes a potentially significant diminution of employee job security.



• The agreement contains unreasonable and/or impermissible deductions from amounts payable to employees as described at s.323 - 326 of the Fair Work Act 2009.

[10] During the hearing, I indicated to Ms Cobby that I shared the concerns outlined by the AWU, and had some additional concerns about the following matters.

[11] In response to question 3.4 in the Employer Declaration, it is indicated that the wage rates in the Agreement are more beneficial than those in the relevant Awards. The statement is incorrect and in some cases the wage rates in the Agreement are less than those in the relevant modern award.

[12] Question 3.6 in the Employer Declaration, which asks whether the Agreement contains any terms or conditions that are less beneficial than those in the relevant awards, is not answered.

[13] At clause 9.3 the Agreement provides for employees to be engaged on a number of bases which are not found in any of the Awards. These include as full time and part time waged; excluded employee full time or part-time and multi-tasked employee. There are no definitions for these types of employment.

[14] Clauses 14.6 and 14.7 of the Agreement purport to authorise the employer to deduct course fees the employer has paid where the employee fails training or fails to complete training, or does not remain in employment for twelve months after completing the training. It is arguable that these provisions are inconsistent with some of the provisions in Part 2-9 Division 2 of the Act and Regulation 2.12 of the Fair Work Regulations 2009 in relation to reasonable deductions from wages.

[15] Clause 16 of the Agreement allows ordinary hours of work for full time employees to be averaged over a 12 month period. The maximum averaging period for the relevant Awards is as follows:

• Security Services Industry Award 2010 - 8 weeks



• Building Construction General On-site Award 2010 - 4 weeks



• Clerks Private Sector Award 2010 - 28 days or an agreed roster cycle.

[16] There are also inconsistent provisions in clauses 20.1.5 and 20.1.6 which provide for averaging over periods up to eight weeks. The maximum periods over which averaging of ordinary hours is permitted impacts on the entitlements of employees to overtime payments, and could result in employees not being better off overall under the Agreement than they would under a relevant Award.

[17] The Agreement provisions in relation to part-time employees allow for hours to be less than 38 in any week, and to be varied according to the needs of the business. All relevant Awards require that the employer and employee agree on reasonably predictable hours and that such agreement be in writing. Variations to hours must also be recorded in writing. The Agreement provisions have the potential to result in part-time employees not being better off under the Agreement than they would be under the relevant Award.

[18] Clause 16.1(c) of the Agreement provides for a minimum engagement for casual employees of two hours. The Security Services Industry Award 2010 and the Building Construction General On-site Award 2010 each provide for a minimum of four hours payment for casual employees while the minimum period under the Clerks Private Sector Award 2010 is three hours. The Agreement does not provide the right for casual employees to elect to have their casual employment converted to full time or part-time employment found in the Building Construction General On-site Award 2010.

[19] Clause 16.1(i) of the Agreement provides that salaried employees are not entitled to overtime, as the salary is set at a level to compensate for reasonable overtime worked. The Agreement does not define reasonable overtime, and does not contain a formula or reference point for calculating salaries. Accordingly, it is not possible to assess whether salaried employees would be better off overall under the Agreement.

[20] Clause 16.1(i) also provides for overtime to be based on the ordinary rate, and paid for at the rate of time and a-half for the first three hours and double time thereafter. This is inconsistent with clause 22 of the Agreement which provides that overtime is payable at the rate of time and a-half for the first two hours and double time thereafter. Clause 22 also contains a definition of overtime as all time worked in excess of 7.6 hours in any one day, averaged over an eight week period, which is inconsistent with other provisions of the Agreement dealing with hours of work and overtime.

[21] For administrative employees, the wage rates in clause 19.1 of the Agreement for full time, part-time and casual employees are below those in the Clerks Private Sector Award 2010. The rates in the Agreement for Security Officers are marginally above those in the Security Services Industry Award 2010 and for Traffic Officers the rates in the Agreement are marginally above the rates in the Building Construction General On-site Award 2010 for full time and part-time employees and below the Award rates for casual employees.

[22] The definition of “shift worker” in clause 29(6) of the Agreement is consistent with the definition in the Security Services Industry Award 2010 and the Clerks Private Sector Award 2010 but is narrower than the definition in the Building Construction General On-site Award 2010. As a result, employees who are covered by the Building Construction General On-site Award 2010 would not be better off overall under the Agreement than they would be under that Award for the purposes of the additional week of annual leave prescribed for such employees under the National Employment Standards. It is also the case that the requirements of s.196 of the Act may not be met with respect to such employees.

[23] The Agreement contains more onerous provisions than those found in the Awards for employees accessing personal leave. Further the Agreement purports to give the employer the right to determine that an employee is suffering from an “infectious disease” and send the employee home. The employer does not have such a right under the relevant Awards.

[24] The Agreement contains provisions dealing with confidentiality, intellectual property, important information and improvements and non-solicitation, which are onerous and not found in any of the relevant Awards. Further, a number of those provisions purport to operate post employment and employees may be exposed to civil penalties under the Fair Work Act 2009 for breach.

[25] Clause 32 of the Agreement provides that work on public holidays is paid for at the “all purpose rate” and that employees will also be given another day off in lieu, to be agreed with the employer. The Awards prescribe payments for work on public holidays at the rate of double time and a-half, and that other days may be substituted for public holidays by agreement between the employer and the majority of employees.

[26] Clause 34.8 of the Agreement deals with termination of employment for serious misconduct, and refers to the employer having a reasonable belief that the employee has engaged in serious misconduct. It is arguable that the provisions may affect the rights of employees to seek a remedy for unfair dismissal, contrary to s.194(d) of the Act.

[27] At the conclusion of the hearing, Ms Cobby indicated that she wished to make further submissions after receiving the transcript of the hearing. I informed Ms Cobby that she would be provided with a period of seven days from the date the transcript was received to make submissions or provide undertakings in relation to the matters raised at the hearing.

[28] The transcript was forwarded to Ms Cobby on 25 July 2012. Ms Cobby has not provided any response to the matters raised at the hearing and has not sought an extension of time in which to do so. Ms Cobby has filed another Form F16 and F17 which appear to relate to the same Agreement, but there is no Agreement attached to either Form or filed with them. An email has been forwarded to Ms Cobby by a member of the Queensland Service Team requesting a copy of the signed Agreement and indicating that the application cannot be processed until all documents have been received.

[29] On 14 August 2012 my Associate sent an email to Ms Cobby in relation to her failure to respond to the concerns about the Agreement raised at the hearing on 20 July 2012, and seeking clarification about the further Form F17 and F18. The email further indicated that if a response was not received from Ms Cobby by close of business on 17 August 2012, a decision would be issued refusing to approve the Agreement.

Consideration

[30] Section 186 of the Act sets out the general requirements which must be met for Fair Work Australia to approve an enterprise agreement. These include, by virtue of s.186(2)(d), a requirement that the Agreement passes the better off overall test. That test, as set out in s.193(1) is in the following terms:

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

[31] In the present case, the Agreement contains a number of terms that prima facie would result in award covered employees and prospective award covered employees, not being better off overall under the Agreement, than they would under the terms of the relevant modern award. The effect of these terms does not appear to be balanced by corresponding benefits in the Agreement.

[32] The wage rates in the Agreement are marginally above or marginally below the wage rates for corresponding classifications in each of the relevant Awards. It is the case that in the event the Agreement was approved, s.206 of the Act would operate so that the base rates in the Agreement would not be less than the relevant modern Award rate. However, even allowing for the effect of s.206, the rates in the Agreement are not sufficient to offset the removal of other benefits conferred by the Awards.

[33] The added difficulty in this case is the failure by the Applicant employer to respond to concerns and attempt to address them or to provide undertakings, despite being provided with a number of opportunities to do so.

Conclusions

[34] I am unable to be satisfied that the requirements for approval of the Agreement have been met, with respect to the Agreement passing the better off overall test. The application for approval of the Agreement is refused. I Order accordingly.

COMMISSIONER

Appearances:

Ms K. Cobby on behalf of the Applicant.

Ms Z. Angus on behalf of The Australian Workers’ Union.

Hearing details:

2012.
Brisbane:
July 20.

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