TE1247
|
TASMANIAN INDUSTRIAL COMMISSION Industrial Relations Act 1984 D & S Investments Pty Ltd - ACN 009-525-286 and Employees classified in accordance with Clause 6 of this Agreement [TE1247 of 2002]
REASONS FOR DECISION Enterprise Agreement - fair in all the circumstances test - awareness of changes to entitlements - awareness of changes to existing conditions of employment - provision of written statements specifying changes - whether tests satisfied - whether agreements can have retrospective application - agreement not approved [1] This application concerns the Bakers Dozen (Production) Enterprise Agreement 2001. The parties lodged the agreement on 17 June 2001 pursuant to s.61H of the Industrial Relations Act 1984. [2] The parties to the proposed agreement are the employer, D & S Investments Pty Ltd - ACN 009-525-286- trading as Bakers Dozen, Warehouse No 8, Cypress Street Industrial Estate, Launceston and full time and part time employees, excluding retail employees employed by the employer. The classes of employment covered by the agreement are Bakehouse Assistant, Baker/Pastry Cook, Cleaner and Driver. Appearances [3] At the hearing on 2 July 2002, Mr Andrew Cameron of the Tasmanian Chamber of Commerce and Industry appeared, together with Mr Andrew Pickett, on behalf of the employer, D & S Investments Pty Ltd. [4] Four employees who were signatories to the agreement: Marilyn Hills, Darren Roles, Scott Townsend and Graeme Dearman, appeared in person and had written authorisations to appear on behalf of five other employees. Two employees neither appeared nor authorised anyone to appear on their behalf. I determined that the hearing should proceed, on the basis that more than 60% of the employees were represented. The questions to be determined [5] The proposed agreement, at Clause 4 - Commencement and Duration, says: "4.1 This agreement will operate from 6 August 2001 and remain in force for a period of five years." (my emphasis) This would mean that the agreement, if approved, would apply for eleven months prior to its approval, effectively replacing the terms and conditions of the Baking Industry Award, which applied, or should have applied, during that eleven months. [6] I raised the question of whether the enterprise agreement is able to have an operative date earlier than the date of approval of the agreement; in other words, whether the Commission has the power to approve changes to the terms and conditions of employment with retrospective effect, and, if it does, would that be fair in all the circumstances? [7] Also to be determined is whether or not the following tests have been met. The tests [8] Under the terms of the Industrial Relations Act 1984 ("the Act"), I must approve an enterprise agreement unless satisfied that:
[9] At the hearing, I satisfied myself that the mandatory provisions were included; that there was no reason to believe that the bargaining process adopted by the parties was unfair or that the agreement was made under duress; and that the secret ballot was in order. As there is an award that applies to the employees concerned, the minimum conditions test does not apply. There was no intervention by the Minister or by an organisation, so that test is not relevant. I am satisfied that the parties are aware of their entitlements and obligations under the agreement and Part IVA of the Act. As I said on the day, I was satisfied that the process, ie, the ballot and the bargaining process, met the requirements of the Act, and I reserved my decision in relation to the content. [10]For the reasons set out later in this decision, I am not so satisfied in relation to the following tests: that the parties were aware any changes to existing conditions of employment which will result from the agreement taking effect (s.61I(2)(b)); that the parties to the agreement were provided with written statements specifying any changes to their entitlements and obligations resulting from the agreement taking effect [s.61I(2B)(a)] and the nature of any changes to existing conditions of employment [s.61I(2B)(b)]; and that the agreement was fair in all the circumstances [s.61J(1)(f)]. Documents and Dates [11] The proposed agreement is a "second generation" agreement, intended to replace an agreement made, under Part IVA of the Act, in 1996. Clause 4 - Commencement and Duration - of that agreement said that it was to remain in force for a period of five years from the date of approval. The date of approval was 1 August 1996. [12] In the absence of any application pursuant to s.61O(2) of the Act to extend the agreement, it expired at midnight on 31 July 2001, therefore the minimum terms and conditions of employment which should have applied from that time are those specified in the Baking Industry Award. [13] Employees of Bakers' Dozen each signed a document entitled "Statement of Awareness" which says:
[14] The attachment is headed "Schedule - Bakers' Dozen (Production) Enterprise Agreement 2001 - Summary of Key Features". It says:
[15] The employees were also provided with a document headed "Comparison of Key Provisions of Enterprise Agreement with the Baking Industry Award." The document sets out the hourly wage rates for employees under the award and under the proposed agreements, and also compares some (but not all) features of the agreement with the award. The comparison document says: "Wage rates have been calculated to allow for non-incidence of penalty rates of any sort." [16] Eleven "Statements of Awareness" were signed by employees and formed part of the documentation sent to the Commission by Mr Andrew Cameron of the Tasmanian Chamber of Commerce and Industry, in support of the application to register the agreement, under a covering letter dated 14 June 2002. The "Statements of Awareness" had been signed on the following dates: 11, 14, 17, 25, 26 September, 3, 19 October, and 22 November 2001. Three were undated. From these dates, it is apparent that the document setting out the terms of the proposed agreement must have been in existence before 11 September 2001. [17] A Returning Officer's Declaration and Report is dated 11 February 2002 and declares that: there were eleven employees eligible to vote; all eligible employees voted; there were no informal votes; nine employees voted for the agreement and two voted against; the percentage of eligible employees who voted for the agreement was 85%; and that the ballot had taken place at the workplace on 11 February 2002. [18] In summary, the chronology is:
The Hearing [19] At the hearing, Mr Andrew Pickett, for the employer, told the Commission that the terms and conditions of employment that had been applied since 1 August 2001 were those as set out in the proposed Bakers Dozen (Production) Enterprise Agreement 2001. He said that no employees had yet entered into any salary sacrifice arrangements in respect of superannuation contributions, as provided for in the proposed new enterprise agreement. [20] I was informed that the employees had not been given statements which set out, in actual dollar amounts, wages which they were entitled to under the terms of the award over the previous eleven months, compared to what they had actually been paid under the (as yet unregistered) agreement. [21] Mr Pickett declined a suggestion that the agreement be amended so that it would have as the commencement the date of approval. [22] In private discussions with the employees, I established the hours that they worked and the fact that they thought that they were better off under the agreement, that is, that the employees thought that they were being paid more under the terms of the agreement than they would have been paid under the award. Submission [23] Mr Cameron submitted that the agreement meets the fairness test. He said that whilst the employees do not receive penalty rates for weekends, they receive a higher rate of pay during the week. He said that the employees are not disadvantaged in any way in relation to annual leave, sick leave, compassionate leave or carers' leave. The agreement provides for improved notice periods, with a sliding scale depending upon the employee's length of service with the company. There is a substantial benefit to the employees in that the agreement allows for the sacrifice of salary into superannuation. It also provides for paid training. The stand down provision would only apply if there is a mechanical failure or other unforeseen problem. Mr Cameron said that the "standard hours of 10pm until 6am or 7am", although different from the award, suit the employees and the requirements of the organisation. The employees preferred these hours, he said, because they allowed them to have the whole day free. This was negotiated between the parties. [24] The agreement needs to be looked at as whole and, he submitted, the employees are no worse off than under the award. [25] Mr Cameron said that the requirements of section 61I(2),(2A) and (2B) have been met. The employees had been provided with a statement of awareness some time prior to the ballot. The result of the ballot showed that 85% of the employees were in favour of the agreement. [26] On the question of retrospectivity, Mr Cameron said that under the provisions of section 61O of the Act an agreement remains in force for the period specified in the agreement. Nowhere in the Act does it say that an agreement is to run subsequent to, or from the date of registration. In the matter of TE1067 of 2000, the Maypole Bakery Newtown Enterprise Agreement 1999 was registered on 4 January 2001 with a commencement date of 14 November 1999, some 14 months prior. In T9814, a decision of the Full Bench in relation to the G and A L Tambarkis agreement, the Full Bench approved an agreement as from 23 April 2001, some 10 months prior to the registration. That matter was an appeal against a decision of Imlach C and the meaning of section 61O was argued. The indication from that decision is that there is no prohibition in the Act against the Commission approving an agreement that has a date prior to the commencement. [27] In the present matter there were various procedural delays in terms of the ballot and getting the agreement to the Commission, but there is no disadvantage [to the employees] with the date that has been put in the document and, Mr Cameron submitted, it complies with the requirements of section 61O. It sets out the period that it is to remain in force. [28] The employer had conducted his business based upon the fact that the employees had indicated their satisfaction with the last agreement and with what has been proposed in the current agreement. [29 )`Mr Cameron said that if the agreement meets the fairness test on the date of the hearing then it is fair both prospectively and retrospectively. It is only at today's date [the date of the hearing] that the Commission has to look at the question of fairness. Parliament has been silent on this issue [retrospectivity] and in the absence of any prohibition on retrospectivity there is no prohibition. FINDINGS Were the employees aware of the changes the agreement would make to their entitlements and conditions of employment? [30] The employees have been paid, according to Mr Pickett, since 1 August 2001 according to an agreement not yet approved by a Commissioner. For the five years prior to that they had their wages and conditions of employment regulated by a registered enterprise agreement. Upon the expiration of the previous agreement the employees should have reverted to the terms and conditions set out in the Baking Industry Award, but that did not happen. Instead, they have been paid according to the terms and conditions of the proposed enterprise agreement that is the subject of this decision. Therefore, for nearly six years the employees have not been paid under the terms of the award. It would not be surprising, therefore, if the employees are not familiar with the terms and conditions of the award. [31] Section 61I(2) says:
[32] Section 61I(2B) says:
[33] The employees signed the "Statements of Awareness" document provided to them, which said that they were aware of the changes the agreement would make to their conditions of employment compared with the award. I have concluded that the employees were, in fact, not aware of the full effect of the changes, or of all of the changes. I have reached this conclusion for the reasons that follow. [34] The proposed agreement replaces the award in its entirety, but the "Comparison of Key Provisions" document provided by the employer to the employees makes no reference to a number of conditions that are contained within the award, and for which there are no provisions in the proposed agreement, for example: minimum engagement for part-time employees, minimum payments for call back, time off in lieu of overtime, first aid allowance, higher duties payments, laundry allowance, rostered days off, and 17½ per cent leave loading on annual leave payments. It makes no mention of changes to a number of conditions, for example, the removal of the mandatory requirement for an employer to give a week's notice of changes to hours or to rosters, nor does it make mention of reductions in payments, eg the payment for work performed on public holidays. [35] The "Comparison of Key Provisions" and the "Summary of Key Features" did not provide employees with the complete picture, or with sufficient information to be able to make a proper comparison, or, for that matter, a reasoned vote after having been acquainted with all of the facts. In some instances the information was misleading, for example, the comparison document says: "Wage rates have been calculated to allow for non-incidence of penalty rates of any sort" and the "Summary of Key Features" says: "The rate of pay for all employees includes a loading to compensate for the non-incidence of penalty rates". To compensate means to provide something equivalent. The Shorter Oxford Dictionary defines "compensate" as
[36] The rates set do not do compensate for the non-incidence of penalty rates, when considering the hours worked by the employees, as shown by the calculations which follow later in this decision. The only employees who would be likely to be better off under the agreement would be those who worked no, or few, hours that attract penalty rates under the award. The enterprise is such that most of the production work is done during the hours which attract penalty rates, and the agreement is intended to cover the production workers. During the hearing, in private discussions with employees, I was told that work was performed on Friday nights running into Saturday mornings, and that a working "day" commenced at 10pm or midnight. [37] I am satisfied that section 61I(2B) of the Act has not been complied with. I find that the employee parties to the agreement were not provided with a written statement at least two weeks before the ballot that specified the nature of any changes to existing conditions of employment, in that the statement provided was incomplete. I have taken "any changes" to mean all of the changes, not some of the changes. The Act requires that the employees be provided with a written statement setting out "any changes" to their existing entitlements, obligations and existing conditions. It does not say "key changes". [38] The obligation upon me is to ensure that the employees have demonstrated a real understanding of their rights and obligations under any award or agreement which applies to them and which would apply if the proposed agreement were not in place. This is not achieved by a general statement that they do so. Simply to assert understanding is not to demonstrate it. During my private discussions with the employees it was apparent that they were not at all familiar with the terms and conditions of the award. In fact, they thought, wrongly, that they would be paid more under the agreement than under the award. [39] I am satisfied that the requirements of 61I(2)(b) of the Act have not been met. I find that the employees party to the agreement were not aware of changes to existing conditions of employment which will result from the agreement taking effect. Differences between the proposed agreement and the award [40] I have done some calculations and comparisons based on comparable classifications and on shifts worked as described to me by the employees. The results, according to my calculations, are as follows:
[41] In this configuration, an employee, for the 47 weeks that the award should have applied following the expiry of the previous agreement, would have earned $4,930.30 more under the award than under the proposed agreement. [42] Similarly, for an employee on a five day per week shift, 12 midnight to 8am Monday to Friday, the amount for a Level 3 operative (Level 2 Rate B in the agreement) would have been $1,437.73 more under the award than under the proposed agreement. [43] I have not included any of the additional payments which would have applied under the award for this period but do not apply under the agreement, eg higher rate for public holidays and weekly laundry allowance. The laundry allowance would have been $180.95 for all employees for the relevant period. [44] A similar comparison, based on the base trades rate in the award (Level 5 - 100% relativity) $13.34 per hour and Baker/Pastry Cook Level 1 $15.00 per hour in the proposed agreement, shows that an employee would have received $4,407.90 more under the award than under the proposed agreement for the relevant period. [45] A tradesperson (Level 5 in the award, Baker/Pastry Cook Level 1 in the agreement) working 5 days, 12 midnight to 8am Monday to Friday would have received $836.13 more under the award than the proposed agreement. Based on the six day shift the amount would be $4,408.13 more under the award than under the proposed agreement. [46] Level 6 in the award (105%) and Level 7 (110%) would equate to Bakery/Pastry Cook Level 2. The difference for the six day shift would be $3621.35 more under the award than under the agreement for Level 6 and $5404.41 more for Level 7. For the five day shift the difference for Level 6 would be $197.87 more under the award than under the agreement, and for Level 7 $1343.26 more under the award than the agreement. [47] If, as does not seem the case, employees worked Monday to Friday, started after 3am and finished before 8pm, then, based on a 38 hour week, they would earn more under the agreement. However, according to what I was told at the hearing, employees covered by the proposed agreement generally do not work those hours. [48] The agreement, at Clause 14.2 - Operating Hours - has the spread of hours as 7.00pm to 2.00pm Monday to Friday, and 8.00pm to 12.00 noon Saturday and Sunday. Mr Cameron said that the "standard hours" were 10pm until 6am or 7am. The employees told me that the hours were 10pm until 7.30 or 8am, or 12 midnight until 8am. [49] From my private discussions with the employees regarding the hours they work, and a close consideration of the effects of the differences between the award and the proposed agreement, I have concluded that employees are substantially worse off financially under the proposed agreement than under the terms and conditions of the Baking Industry Award. Despite their belief that, during the 47 weeks since the last agreement expired, they were earning more by being paid under the terms of the proposed agreement, they were actually earning less than they would have earned under the award. [50] In considering whether or not the agreement is fair in all the circumstances, I have not confined myself to consideration of wage rates and penalty rates alone, but have considered the totality of the package. I have considered other differences between the award and the agreement, not all of which were made known to the employees through the statement of comparison. I have assessed them, in terms of their effect on employees, as positive, neutral and negative. Positive
Neutral
Negative
[51] In considering whether the agreement is fair in all the circumstances I need to consider advantages and disadvantages for all parties. Clearly, a reduction in earnings is a loss to employees and a gain for the employer. In circumstances where the short or long term viability of an enterprise may depend upon making savings in labour costs, then it may also be to the advantage of employees to reduce labour costs in the interests of job security. No such submissions were put to me, nor was there any evidence presented relating to the financial situation of the company, or any submissions as to why it is fair for employees to earn less to under the agreement than they would under the award. [52] A consideration of the totality of the "package" and the advantages and disadvantages to the parties leads me to conclude that the agreement is not fair to the employees and therefore is not fair in all the circumstances. The reasons for this include: the reduced earnings of employees; the loss of conditions in the overall "package"; the lack of sufficient gains to compensate for loss of earnings; the failure to supply the employees with sufficient and accurate information to enable them to make a properly considered decision; the misleading nature of the references to "compensation" for loss of penalty rates; and the retrospective nature of the application, which, if approved, would remove from the employees an entitlement to possibly some thousands of dollars which they may have already earned (although it was not paid to them). Retrospectivity [53] I have already found that the agreement is not fair in all the circumstances. One of these circumstances is the proposed retrospective date of the application of the terms and conditions of the agreement. [54] Mr Cameron argued that if an agreement is fair today, it would be fair yesterday and fair tomorrow. He said that the date of the application of the terms and conditions makes no difference to the fairness of the agreement. Whilst this is a superficially attractive argument, I disagree in the circumstances of this case. If a new agreement had been entered into immediately following the date of the expired agreement then the employees would not have reverted to the award and they would not have earned the wages that they are entitled to under the award. They would not be in a position where, if the agreement is now approved with retrospective operation, they would lose their entitlement to wages they have already earned. This alters the situation significantly. In my view, this would not be fair in the circumstances of this case, where the employees, by their own admission, did not realise that they are, most likely, owed money for the work they performed between the expiry of the previous agreement and the date on which they voted for the new agreement. By voting for the new agreement, with a retrospective date, they, in effect, voted away the money they had already earned. This might perhaps be fair, if the employees knew that was what they were doing, but, it appears, they did not. They told me that they thought they earned more under the agreement. Therefore, in this case, the timing is of importance. [55] The delays in bringing the agreement before the Commission were not the result of any action or inaction on the part of the employees. The lodging of the application, the production of the paper work, and the organisation of the ballot were all in the hands of the employer, who has had nearly six years since the date of operation of the first agreement to make arrangements for another agreement to be put in place. For whatever reason, there was a very significant delay. [56] There are two aspects to the questions of retrospectivity. I have already considered the question as it relates to fairness in this case, and a factor in the consideration of fairness is the very significant delay between the time of the expiry of the old agreement and the application to the Commission for the approval of the new agreement. There is also the question of whether or not the Commission has the power to approve an agreement which has the effect of altering the terms and conditions of employment retrospectively, and, related to that, what is the earliest date that an agreement, if approved, could apply from? [57] Mr Cameron argued that the Act does not prohibit retrospective application, and that all that is necessary is for the agreement to specify the period of operation, which could be backward or forward. [58] Section 61O(1) says:
[59] It says "remains in force." It does not say, for example, "operative for a term to be specified in it" , as is the case for agreements made under s.55 of the Act. [60] The word "remain" means, according to the Shorter Oxford Dictionary:
[61] The words "remain in force" connote prospectivity, that is, how long the agreement is to continue into the future, to carry on. It is not possible to continue backwards, nor, I think, is it possible to "remain in force" backwards. [62] If Mr Cameron's argument was to be accepted, then an agreement could be made under Part IVA of the Act which would be binding on all employees employed during the previous five years, some of whom may have left that employment, not participated in the ballot, and who might then, technically, owe their past employer money by way of overpayment of wages. Similarly, there might be employees who are currently owed money because they were underpaid, and such agreement would preclude them from taking action to recover those underpaid wages. Such an approach would, I think, offend the orderly conduct of industrial relations in Tasmania. [63] I do not think retrospectivity, in terms of changing wages and conditions, was contemplated by Parliament. The Act is silent in this regard, whereas it quite specifically provides for retrospective application in the case of agreements made under section 55, and in the case of the making of awards. [64] Section 55, which applies to agreements made between unions and employers, says, at s.55(6)(b) that the industrial agreement has effect from:
[65] Section 37, which applies to the making of awards, says:
[66] I am of the view, given the silence of the Act in relation to the retrospective application of the terms and conditions of an enterprise agreement, that a prohibition against retrospectivity should be assumed. [67] Unlike agreements made under s.55 of the Act, which continue in force until a party retires from the agreement [s.55(7)], an enterprise agreement ceases to have effect unless the parties make a further agreement to extend the registered enterprise agreement [s.61O(2)]. Unless a further agreement is made to extend the agreement, the parties revert to the award (if there is one which has application). Because the Parliament has determined that the award rates apply upon the expiration of an enterprise agreement, then, logically, it must have been contemplated that the relevant award will apply until the date an enterprise agreement is entered into. [68] Section 61D(2) of the Act says:
[69] An enterprise agreement must be made between employers and employees (s.61D). An employee (or employee committee) cannot be a party to an agreement any earlier than the date of the ballot (in the present case 11 February 2002). An agreement cannot exist without employees being a party to it and employees are not able to be a party an agreement before the date of the ballot. Therefore, it follows that the agreement cannot have application any earlier than the date of the ballot. [70] The parties to the agreement are determined as at the date that the agreement is entered into. The agreement was executed, that is, it was signed by the parties, on 11 and 12 February 2001 six and a half months later than the date proposed for the application of the terms and conditions contained within it. [71] I have concluded that I am without power to approve an agreement with application any earlier than the date on which the parties entered into the agreement, that is, the date on which it was executed, and that that date could be later but certainly could not be earlier than the date of the secret ballot. [72] The process therefore is, firstly there must be a secret ballot, which must take place before employees can become party to an agreement, then the agreement must be executed, giving effect to the results of the ballot. That is the earliest date from which the terms and conditions of the agreement can apply. Therefore an agreement (provided it passes the tests, including the fairness test) may have application earlier than the date of approval, (which date is only relevant to the approval process itself,) but it cannot have application earlier than the date it is entered into. [73] The date the agreement the subject of this decision was entered into was 12 February 2001. I find that the earliest date that the terms and conditions of the Bakers Dozen (Production) Enterprise Agreement could apply from, (if it had passed the fairness test) is 12 February 2002. [74] Mr Cameron referred to a decision of the Full Bench, T9814 of 2001, G & A Tambakis, trading as Georgio's Café and Takeway, in which, he said, the Full Bench approved and registered an agreement as from 26 April 2001, with application some ten months prior to the date of registration. He said that the indications from the decision were that there is no prohibition in the Act which prevents the Commission from approving an agreement which has a date prior to the commencement of the agreement. [75] I disagree. The Full Bench decision was in relation to an appeal against Imlach C's refusal to approve the agreement. The Commissioner had refused further adjournments in relation to the matter and dismissed the application so that, if the agreement were to be pursued, it could be done so afresh and free of any suspicion or doubt. The Full Bench commented that the Commissioner was of the view that the process was tainted by an implication that he had somehow provided approval for the agreement prior to the hearing, and that his concern about the process was justified. The Full Bench found that the Commissioner had not made a legal error in his refusal to approve the agreement, as he had the power not to approve an agreement if he is not satisfied that it has met the requirements of the Act, but that he was in error in not informing the parties in writing of his reasons for not doing so. The Full Bench noted that the Commissioner did not make a specific finding that the tests had not been met. The circumstances in the present case are not the same. [76] What is similar to the present case is that the employees in the matter under appeal had previously been covered by an agreement that had expired, and should therefore have reverted to the terms of the award until such time as a new agreement was reached and approved by the Commission. The Full Bench amended the operative date of the agreement to the date the agreement was lodged with the Commission. The decision said:
[77] The present case is just such a one. It has the effect of diminishing award entitlements retrospectively. Even if I am wrong in concluding that I am without power to approve the agreement with a date of application any earlier that the date the agreement was entered into, I am satisfied that the circumstance of the retrospective application of diminished entitlements in itself is a circumstance which makes it unfair. [78] For the reasons given in this decision, I refuse to approve the agreement.
P C Shelley Appearances Date and place of hearing: | ||||||||||||||||||||