BLOG

Our thoughts on some of the industry's hot topics
Get In Touch

Oh no! Enterprise Agreements just got a whole lot harder.

By Tim Dive – Senior IR/HR Consultant 

 

A recent Fair Work Commission (Full Bench) decision, [2018] FWCFB 3610, has provided Australian employers that have Enterprise Agreements, with important information related to all-inclusive or “loaded” rates.

The information from [2018] FWCFB 3610 may just be the determining factor in whether or not your Enterprise Agreement will be approved or declined by the Fair Work Commission, meaning you may be sent back to the negotiation table with employees and their Union, even after a majority “yes” vote was attained.

Loaded Rates means a rate of pay, paid to employees that, either in part or fully, accounts for all hours worked, overtime, penalty rates, loadings and allowances.

This would include annualised salaries, provided under Enterprise Agreements, as well wages that are averaged across a set period of time, let’s say 1 month (for example).

This all came about when the Coles (Coles Supermarkets) Enterprise Agreement approved, then quashed on appeal, as the Loaded Rates established in the Agreement did not provide ‘better off overall’ conditions in opposition to the relevant Modern Award, for those primarily working night shifts.

What are the key takeaways from the decision?

Employers with Enterprise Agreements that calculate wages payable via all-inclusive or loaded rates of pay, will probably need to submit extensive and highly detailed data to the Fair Work Commission, to obtain approval.

This means:

  • Listing each and every allowance and penalty or loading payable under each of the relevant Modern Awards that would otherwise apply to your workforce;
  • Listing each and every allowance and penalty or loading payable provided by your Enterprise Agreement;
  • Developing easy to understand, specific work patterns or rosters with start, finish and break times, days, and correlate Modern Award rates, as well as Enterprise Agreement rates payable to demonstrate the differences between the instruments; and
  • Justification about why specific allowances and penalties or loadings would or would not be payable in both the Modern Award/s and Enterprise Agreement/s.

Employers that require flexibility in rosters and work patterns may have some difficulty meeting the Better Off Overall Test (BOOT) where all-inclusive or loaded rates of pay are part of their Enterprise Agreements.

This typically includes (but is not limited to):

  • Farming and Agricultural workplaces
  • Construction, Engineering, and Resources sector employers
  • Any industry impacted by weather patterns and unpredictable seasonal demands; and
  • Businesses/workplaces that require work to be performed around-the-clock.

Employers should be prepared and give careful consideration to what they’re willing to commit to, by way of written undertakings, in order to have their Agreements approved.

This means:

  • Reviewing your data developed in point 1 (above) and identifying where your Enterprise Agreement leaves employees not better off, than they would be under the Modern Award;
  • Writing and providing to the Commission, undertakings to outline why or how your employees will not fall into worse off conditions in your workplace under your Agreement; and
  • Being prepared to give away some of the flexibility your Agreement may provide you with, if it means getting your Agreement over the line.

 

What should I expect (and be ready to conquer) with my next application to the Commission? 

Unions will utilise this decision wherever they can to put the brakes on your Agreement being approved by the Commission. Expect this, do the work upfront to assist the Commission in their approval process, and that may just save you months of red-tape, hearings and arguments.

Expect the Commission to be highly critical and leave no stone unturned. This means wherever you find ambiguity, uncertainty or contradictions in your Enterprise Agreement, you will be questioned and will most likely need to submit a bunch of supporting evidence for a Member’s approval.

Expect to deal with a brain-draining period, away from your core activity. From the moment bargaining with employees and Unions commence, right through to submitting applications and presenting at Commission hearings (potentially against Union defiance), you will need to resource the development of Enterprise Agreements with people that know precisely what they’re doing.

 

Find the Full Bench decision here (but be warned – it’s quite a read!):

https://www.fwc.gov.au/documents/decisionssigned/html/2018fwcfb3610.htm#P34_2312

IS IT TIME TO RETHINK YOUR CLAN?

Our services are designed to unite your team with the right leadership, support and development, growing your business, brand and reputation.