A security company has been given short shrift by the Fair Work Commission with its attempt to gain approval of a streamlined agreement which wrapped up penalties and various allowances into a composite rate. Despite some pay rates being nearly 50% higher than their award counterparts, and the employer’s willingness to give comprehensive undertakings, the application was firmly dismissed.
The agreement attempted, like so many, to simplify the variety of allowances and penalties applying to work performed depending on time of day or day of week. It also included consideration of overtime. This is a well-known motivation for employers to enter bargaining where work is performed in a wide array of timeslots. The administrative ease it delivers is appealing and, if the agreement is approved, it also delivers peace of mind.
However the FWC is bound by full bench authorities when it is dealing with approvals. In this instance, the Commissioner cited the important Loaded Rates Decision which sets out the principles of applying the better off overall test in such cases. That decision requires an analysis of the effect of the proposed agreement on every employee, which is what the legislation actually says.
But also, that decision says if the agreement is written in such a way that a set of circumstances could arise where a loaded rate was insufficient to cover award obligations, then the agreement can’t be approved. For example, if an agreement’s loaded rate were to be established on the basis of ten night shifts per month, but the agreement itself did not include that restriction on the employees’ rosters, then the deal could not be approved.
The agreement in this case did not cover off this ground rule. The employer offered undertakings which, in the end, the FWC decided would be too much and too complex to not result in substantial change to the document on which the employees voted. As such, there was no way it could be approved.
The FWC has little option in cases like these but to reject the proposed agreement. The decision underlines the need for safety net clauses which will avoid rejection at the approval stage and allow the simplicity and certainty being sought by the employer to be achieved.