Note: An appeal pursuant to s.604 (C2012/3302) was lodged against this decision - refer to Full Bench decision dated 1 November 2012 [[2012] FWAFB 9398] for result of appeal.
[2012] FWA 161 |
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DECISION |
Fair Work Act 2009
s.185 - Application for approval of single-enterprise agreement
ALDI Foods Pty Limited as General Partner of ALDI Stores (A Limited Partnership)
DERRIMUT AGREEMENT 2012 (AG2011/13261)
STAPYLTON AGREEMENT 2012 (AG2011/13172)
MINCHINBURY AGREEMENT 2012 (AG2011/13173)
COMMISSIONER MCKENNA |
SYDNEY, 19 MARCH 2012 |
Applications for the approval of the Derrimut Agreement 2012, the Stapylton Agreement 2012 and the Minchinbury Agreement 2012 - applications dismissed.
[1] ALDI Foods Pty Limited as General Partner of ALDI Stores (A Limited Partnership) (“Aldi”) has made application pursuant to s.185 of the Fair Work Act 2009 for the approval of three single-enterprise agreements which, despite the differently-titled headings on the agreements, are to be known, by cl.1 of each agreement, as the Derrimut Agreement 2012 (“Derrimut Agreement”), the Stapylton Agreement 2012 (“Stapylton Agreement”) and the Minchinbury Agreement 2012 (“Minchinbury Agreement”).
[2] The agreements concern the pay and conditions for employees working in and from three of Aldi’s distribution centres, namely, the Derrimut distribution centre in Victoria, the Stapylton distribution centre in Queensland and the Minchinbury distribution centre in New South Wales; and for employees working in Aldi’s stores that are supplied by the respective distribution centres. The Derrimut Agreement is intended to operate in Victoria and New South Wales; the Stapylton Agreement in Queensland and New South Wales; and the Minchinbury Agreement only in New South Wales. The agreements are proposed to commence seven days after approval by Fair Work Australia or on the expiry of the existing agreements made under the Workplace Relations Act 1996, whichever date is later. Aldi submitted the commencement dates for the agreements should be 1 April 2012. The agreements provide that they will expire four years after the date of approval, unless terminated by agreement or replaced in accordance with the Fair Work Act.
[3] By way of background, upon commencement of operations in Australia, Aldi engaged all its employees under Australian workplace agreements (“AWAs”), before beginning a process of moving to the regulation of terms and conditions under agreements made pursuant to legislation that preceded the Fair Work Act as well as by AWAs. Some AWAs remain in operation and will run to 2013, but the numbers were not in evidence. The agreements before Fair Work Australia are intended to replace existing agreements, namely, the Stapylton Agreement 2008, 1 the Derrimut Agreement 20082 and the Minchinbury Agreement 2008.3 Aldi also has agreements made under the Workplace Relations Act relating to its distribution centres located in Dandenong in Victoria and Prestons in New South Wales, and the stores they supply, namely, the Dandenong Agreement 20094 (“Dandenong Agreement”) and the Prestons Agreement 20095 (“Prestons Agreement”). All five agreements made under the former legislation are still within term. While the agreements before Fair Work Australia have been separately negotiated in the different regions and contain differently-negotiated provisions, they have the same origins reflecting the initial AWAs made by Aldi with its employees.
[4] The Derrimut, the Stapylton and Minchinbury distribution centres can each service, as a type of distribution hub, up to about 100 stores within a driving radius of approximately five hours. They each presently service roughly 60 to 70 stores. Each distribution centre and the stores serviced from the respective centre form an independent region. The regions operate autonomously and report independently as profit centres. The distribution centres in Minchinbury and Prestons are in reasonably close proximity (about a half an hour’s drive apart), as are those in Derrimut and Dandenong. As a result, stores within a large, overlapping geographic area can be serviced by deliveries made from either the Minchinbury distribution centre or the Prestons distribution centre; or, in Victoria, from the distribution centres in Derrimut and Dandenong. The Stapylton distribution centre does not have any closely neighbouring distribution centre; it presently supplies stores as far south into New South Wales as Coffs Harbour in circumstances where the stores supplied by the Minchinbury distribution centre presently go as far north as Port Macquarie.
[5] The bargaining representatives for the agreements differ in their approaches to the applications for the approval of the agreements in which they had an interest. The Shop, Distributive and Allied Employees’ Association (“SDA”) supports the approval of each agreement. The Victoria-based office of the National Union of Workers (“NUW”) supports the approval of the Derrimut Agreement. The National Union of Workers, New South Wales Branch (“NUWN”) initially supported the approval of the Minchinbury Agreement, but now opposes approval. The Transport Workers’ Union of Australia (“TWU”) opposes the approval of the Minchinbury Agreement, and also contends that the concerns about that agreement apply similarly to the Derrimut Agreement and the Stapylton Agreement. Three individual employee bargaining representatives did not seek to appear in the proceedings and did not advance submissions about the approval of the agreements, other than in relation to their views concerning the undertakings proposed by Aldi.
[6] In support of the applications for the approval of the agreements, Aldi relied particularly on the contention that the agreements pass the better off overall test, that the employees had voted in favour of the agreements, and that the agreements essentially represent a continuation of the industrial arrangements with which Aldi and the employees were well-familiar coupled with changes that have been incorporated into the agreements to reflect the employees’ wishes and to introduce statutorily-required inclusions. Aldi contested the challenges made by the TWU and the NUWN. Aldi submitted the objections had been advanced without any evidentiary basis and, further, the jurisdictional objections were without substance - particularly considered in the context of comparatively recent authorities. Aldi was also critical of some of the union bargaining representatives apropos their role as contemplated within the legislative framework, including good faith bargaining. Aldi submitted the agreements should be approved with the written undertakings it has given.
THE AGREEMENTS
[7] The three agreements have broadly similar, but not identical, provisions. For example, there are different rates of pay in the agreements and other points of distinction. The Minchinbury Agreement and the Derrimut Agreement contain closely similar rates of pay, whereas the rates in the Stapylton Agreement are generally somewhat lower. I should note there are pages of text in the bodies of the agreements and schedules which do not have sub-numbering of paragraphs within clauses, so as to explain the lack of reference in this decision to specific sub-clauses.
[8] The agreements deal with classifications including warehouse operators, warehouse mechanics, warehouse caretakers, maintenance engineers, palletisers, transport operators, store managers, assistant store managers, store management trainees, store assistants and stock replenishers. The following modern awards arise in the consideration of the better off overall test (together with miscellaneous notional agreements preserving State awards (“NAPSAs”)): the General Retail Industry Award 2010, the Storage Services and Wholesale Award 2010, the Road Transport and Distribution Award 2010, the Manufacturing & Associated Industries and Occupations Award 2010 and the Miscellaneous Award 2010 (“the awards”).
[9] Some of the broadly common features of the agreements include, in no particular order, the following matters. The agreements:
[10] The statutory declarations filed by Aldi in support of the applications for the approval of the agreements, declared by David Zalunardo, Managing Director of the Prestons Region, contained some information that was wrong or incomplete, with the result that Aldi subsequently tendered amended declarations. There was no opposition to the tender of the further declarations and Mr Zalunardo was not required for cross-examination. Aldi tendered affidavits in relation to the applications, which included additional supporting information from: Margaret McNaughton, solicitor; Andrew Starr, Managing Director of the Derrimut Region; Viktor Jakupec, Managing Director of the Stapylton Region; and Mr Zalunardo. Mr Zalunardo provided a further statutory declaration in relation to queries I raised in correspondence dated 19 January 2012 and also gave short oral evidence. Although Mr Zalunardo was not cross-examined as to his written or oral evidence (and I do not perceive my role in the proceedings as that of a cross-examiner), Mr Zalunardo made certain assertions which were incorrect, such as to certain provisions being common, and there was some other evidence before Fair Work Australia which at least appeared to be internally contradictory.
[11] Aldi has given undertakings concerning the agreements, which have been revised over the course of the proceedings. The undertakings that relevantly arise for consideration were filed on 19 December 2011 in relation to the Stapylton Agreement and Minchinbury Agreement, and the undertakings as to the Derrimut Agreement filed on 20 January 2012. Further undertakings were filed on 27 January 2012, which are to be read in conjunction with the undertakings filed on 19 December 2011 and 20 December 2011.
[12] Aldi requested that the proceedings be adjourned for three weeks from 27 January 2012, so as to attend to certain matters in connection with the applications for approval. Aldi’s final documentation was filed on 15 February 2012 and the final written submission from one of the bargaining representatives as to the undertakings was filed on 20 February 2012.
TWU OBJECTIONS
[13] The TWU contended the Minchinbury Agreement (and, by extension, the Derrimut Agreement and the Stapylton Agreement) is not an enterprise agreement within the meaning of the Fair Work Act and there is no valid application before Fair Work Australia. In the alternative, the TWU submitted the agreement cannot be approved because Fair Work Australia could not be satisfied that the employees have genuinely agreed to the agreement; or that the group of employees covered was fairly chosen; or that covered employees will be better off overall under the agreement. The TWU also submitted that Aldi did not comply with pre-approval steps, namely, ensuring that all employees had access to the agreement and other incorporated material during the requisite period.
[14] Scope: The TWU noted cl.5 of the Minchinbury Agreement provides that it covers “classifications of Employees of Aldi employed in the Minchinbury Region” and that region is defined as “ALDI’s operations which are nominated by ALDI from time to time as falling within the Minchinbury Region”. Thus, the agreement applies to a group of employees determined unilaterally by Aldi from time to time. On the face of the agreement, Aldi could expand the coverage of the agreement to the entire country, or effectively terminate the agreement by reducing the region to nothing. Further, Aldi’s evidence confirmed the likelihood of the variation of the Minchinbury region and a subsequent movement of employees into, and out of, the scope of the agreement.
[15] Terms and conditions of prospective employees: The TWU noted cl.5 of the agreement provides that “ALDI may engage Employees under these classifications under different hours of work and pay arrangements” and further provides that “this Agreement applies to the exclusion of all awards, agreements, industrial instruments and transitional instruments that would otherwise apply to Employees”. The TWU submitted that the effect of this “extraordinary provision” is that on approval of the agreement, and for at least four years subsequently, Aldi would have total discretion to set the terms and conditions for new employees within an area determined by it.
[16] Start and end dates of the agreement: The TWU submitted that employees considering the Minchinbury Agreement could not determine its start and finish dates. Nor could they determine those dates by reference to the Minchinbury Agreement 2008, which similarly does not include start and finish dates but instead refers to date of lodgement with the previous Workplace Authority. The TWU submitted this information as to dates is not available to the public.
[17] Dispute procedures: The TWU submitted the dispute resolution procedures of the agreement do not meet statutory requirements.
[18] An agreement within the meaning of the Act: The TWU submitted that, for at least two reasons, the agreement is not an enterprise agreement within the meaning of s.172 of the Fair Work Act and, thus, there is no valid application under s.185. First, s.172(1)(a) provides that a single-enterprise agreement is one about matters pertaining to the relationship between an employer who will be covered by the agreement and that employer’s employees who will be covered by the agreement. Section 172(2)(a) further provides that an agreement may be made with the employees who are employed at the time the agreement is made and who will be covered by the agreement. The agreement is made when the employees who will be covered by the proposed agreement are asked to approve the agreement and vote to approve the agreement: s.182(1). The TWU submitted that the employees who were asked to vote on the agreement were not “the employees who will be covered by the agreement”. The employees “who will be covered by the agreement” - that is, those working in the Minchinbury region as periodically defined – is a different, shifting group. It may be the voters; it may include the voters, along with other employees added as a result of a re-definition of the region; it may include some of the voters and a number of others currently employed by Aldi; it may include some or none of the voters. The agreement has not, therefore, been made with the employees who are employed at the time of the agreement and who will be covered by the agreement; nor could it, because that group is entirely indeterminate.
[19] Second, the agreement is not an enterprise agreement known to the Fair Work Act in circumstances where: Aldi’s capacity to alter the scope of the agreement amounts to a capacity to vary or terminate it in a manner inconsistent with Div 7 of Pt 2-4, dealing with variation and termination of agreements; Aldi’s capacity to alter the scope of the agreement allows it to extend its application to employees who have never seen the agreement, let alone approved it; and the agreement allows Aldi unilaterally to set the terms and conditions applying under the agreement with respect to new employees. The terms and conditions for new employees are necessarily unknown to Fair Work Australia, and those terms and conditions may include matters not pertaining to the employment relationship or objectionable terms.
[20] The TWU submitted the circumstances considered in Commonwealth Bank of Australia v Finance Sector Union of Australia [2007] FCAFC 18 (“CommSec”) are closely analogous to the present case except that the alterations available under the Minchinbury Agreement are far more profound than considered in CommSec; and the no disadvantage test then operating required a positive satisfaction of disadvantage to prevent approval of an agreement. The submissions drew attention to the comments of Branson J (with whom Spender and Marshall JJ agreed on this point) dealing with the validity of an agreement which allowed individual employees to opt-out of an agreement and agree on different terms to prevail over the agreement. The TWU drew particular attention the decision from [168].
[21] The TWU submitted that an analysis similar to that adopted in CommSec was also adopted by the Federal Court in Construction, Forestry, Mining and Energy Union v Australian Industrial Relations Commission [1999] FCAFC 847 from [101]. In submitting the application for the approval of the Minchinbury Agreement should be dismissed, the TWU contended the comments of the Federal Court in CommSec here apply “precisely” save that the Minchinbury Agreement “may cease to bind some or all of those whose employment is subject to the agreement” not by mutual agreement but at Aldi’s discretion.
[22] Genuinely agreed: The TWU submitted, referencing s.186 and s.188 of the Fair Work Act and CommSec, that it could not be said employees to be covered by an agreement had genuinely agreed to it in circumstances where a number of them were not aware of its existence. In respect of those employees who did vote on the agreement, it is apparent that when voting for the agreement they did not know: where the agreement would apply at that time, and certainly did not know when it would apply in future; the terms and conditions applicable under the agreement to new employees; and the start and end dates of the agreement. Thus, it could not seriously be argued that employees had sufficient knowledge and understanding of the agreement to genuinely agree to it. The TWU referred also the Explanatory Memorandum, where this was said:
“797. In determining whether there are reasonable grounds for believing that the agreement has been genuinely agreed to by employees, FWA must consider whether the agreement has been validly made in accordance with clause 182 (see, e.g., Construction Forestry Mining and Energy Union v Australian Industrial Relations Commission (1999) 93 FCR 317 and the decision of the AIRC in Grocon Pty Ltd Enterprise Agreement (Victoria) (2003) 127 IR 13).”
[23] Fairly chosen: As to s.186(3) and s.186(3A) of the Fair Work Act, concerning the fairly chosen criterion and geographical, operational or organisational distinctness, the TWU submitted the group of employees covered by the agreement is variable over time at Aldi’s discretion. The membership of that group “is unknown and unknowable” and Fair Work Australia could not positively be satisfied the group was fairly chosen. Further, even if it were said that the the group is determinable as the group of employees in the Minchinbury region, Fair Work Australia should find that the group was not fairly chosen because it is a group that is variable at Aldi’s complete discretion, with the result that employees could be, as it were, “left outside the tent”.
[24] Better off overall test: As to s.193 of the Fair Work Act, concerning the better off overall test, the TWU reiterated the proposition that Fair Work Australia cannot know who will be covered by the agreement in the future, nor can it be known what terms and conditions will apply to prospective employees under the agreement. Thus, Fair Work Australia could not be satisfied that each award covered employee is better off overall under the agreement and certainly could not be satisfied that prospective award covered employees would be better off overall. In order to test the agreement in that way, Fair Work Australia is required to analyse the agreement conditions against the award conditions of the prospective employees. Such analysis is impossible in circumstances where Fair Work Australia does not know who or where those prospective employees are, or what their conditions of employment under the agreement might be. The TWU noted that Aldi has given what it described as “qualified” undertakings in relation to the terms and conditions for prospective casual employees, but submitted that the deficiency presented by cl.5 of the agreement is so fundamental that it is not apt to correction by an undertaking; and, in any case, the undertakings given by Aldi are inadequate to deal with the deficiency because cl.5 is not limited to casual employees. On its face, cl.5 of the agreement provides to Aldi total discretion to set terms and conditions for any employee engaged during the life of the agreement.
[25] Pre-approval requirements: The TWU submitted the pre-approval requirements in s.180 of the Fair Work Act had not been met in relation to the Minchinbury Agreement and elaborated some specific contentions thereto. More generally, the TWU submitted that simply placing a copy of an enterprise agreement on a notice board could not be considered to constitute reasonable steps in the present case, albeit such placement may be sufficient in some other employment situations that did not have the particular characteristics of Aldi’s workplaces. The steps taken thereafter concerning the provision of the agreement to individual employees might be considered reasonable, but those steps occurred too late to meet the statutory requirements. Further, the employees’ access to Aldi’s company policies, being policies incorporated by cl.7 of the agreement, had not been satisfactorily answered and, on that further basis, Fair Work Australia could not be satisfied there had been compliance with s.180(2). The TWU submitted that Aldi failed to meet the most basic pre-approval steps and the agreement cannot be approved.
[26] TWU’s general observations: The TWU submitted that, as a general proposition, it cannot be the case that the Fair Work Act could contemplate approving an agreement with scope variable at an employer’s discretion and with conditions determinable by an employer as it sees fit. Approval of such an agreement would defeat the range of legislative protections, including, most obviously, the requirements as to genuine agreement and the better off overall test. If the agreement were approved, there would be nothing to prevent Aldi from, for example, declaring the Prestons distribution centre to be part of the Minchinbury region. Employees at Prestons would thus find themselves arbitrarily covered by an agreement they had not approved and which might reduce their terms and conditions of employment. Such an agreement has neither authenticity nor moral authority, to use the words of Wilcox and Madgwick JJ, with whom Moore J agreed, in Construction, Forestry, Mining and Energy Union v Australian Industrial Relations Commission at [126], being a judgment that was relied on more generally by the TWU from [121]. The concerns about the “malleability” of the scope of the agreement are not hypothetical. Those concerns are real because Aldi’s evidence specifically acknowledged the likelihood of the transfer of stores and employees, and the undertakings specifically contemplate the transfer of employees from the region.
[27] The TWU submitted that the ambiguity affecting the scope and provisions of the Minchinbury Agreement permeates Aldi’s industrial arrangements, for example, the agreements and their predecessors do not include “Aldi” in the title. This unusual fact creates serious difficulties for any employee or other person wishing to locate the agreements. In this respect, the TWU noted that the transcript of earlier proceedings concerning an application by the TWU for bargaining orders to prevent the Minchinbury Agreement going to a ballot indicated that not even the presiding member was able to locate an Aldi agreement. For reasons which were not immediately apparent to the TWU, Aldi’s evidence referred to this earlier application by the TWU. The TWU submitted that, as the matter had been raised by Aldi, it should be noted the essence of that application was an allegation by the TWU that Aldi had made a sudden decision to rush the Minchinbury Agreement to a ballot in response to a request from employees for proper and formal collective negotiations.
NUWN OBJECTIONS
[28] The NUWN objected to the approval of the Minchinbury Agreement on five principal bases and relied on similar grounds in submitting that the undertakings given by Aldi did not address the NUWN’s concerns about the agreement. Those concerns were, first, that its members did not vote in favour of the agreement. Second, the NUWN was concerned that the agreement’s bankable hours arrangements mean employees can be in a situation where they work fewer than their full contract hours due to circumstances beyond their control; employees then need to provide unpaid work for Aldi to make-up that time, with the result that this passes the risk of non-availability of work from Aldi to the employees, outside the stand-down provisions of s.524 of the Fair Work Act. Third, pay increases under the agreement depend on business performance and market conditions.
[29] Fourth, as to what the NUWN described in its submissions as the “opt-out” arrangements of the agreement, prospective employees would not have a choice as to whether to opt-out of the agreement. Employees forced to opt-out of the agreement would lose statutory rights concerning the agreement, and no undertakings have been proposed by Aldi that would not make it a condition of employment that a prospective employee opt-out of the agreement. The NUWN submitted that, as a result, the agreement does not pass the better off overall test.
[30] Fifth, the agreement can create distinct groups within the one organisational area, with no sound basis for distinguishing between the groups covered by the agreement or not covered by the agreement. Prospective employees do not have the choice as to whether to be covered by the agreement if the region, and thus the applicable agreement, were changed by Aldi. The NUWN submitted the circumstances in relation to the Minchinbury Agreement are distinguishable from the facts considered in Newlands Coal Pty Ltd v CFMEU [2011] FWAFB 7325. The NUWN further submitted that two groups of employees working in the same organisational area could be covered by different industrial instruments, with the result that the group would not be fairly chosen.
[31] A submission from the SDA dated 24 January 2012 was tendered by Aldi, which addressed matters including the concerns raised by the NUWN. It read:
“... The SDA has, [sic] today received the correspondence from the [NUWN] which raises some concerns or issues. The SDA has had a further conversation with ALDI over the issue raised by the [NUWN] of employees opting out of an agreement which if the [NUWN] interpretation was correct would be alarming. ALDI have expressed to the SDA its position that an employee could opt out but only to one of the other regional agreements that applies to ALDI, that is the employee opting out would not be agreement free. If this is the application of the provision then the SDA would not have a concern.
The SDA has also reviewed a further Statutory declaration of ALDI which addresses further issues of voting, AWA termination, regional grouping etc. The SDA does not have any issues over the content and believes it addresses the issues that Fair Work Australia has raised. ...”
CONSIDERATION
Threshold objections
[32] I do not consider the agreements may be approved for reasons going to failing to pass the better off overall test and disconformity with the National Employment Standards. As such, the threshold issues raised by the TWU and the NUWN do not necessarily arise for determination given my conclusions that the applications must be dismissed irrespective of the threshold issues. But in the event I am wrong in my assessment as to the better off overall test and the National Employment Standards, it is necessary to make findings as to at least some of the threshold matters raised by the TWU and the NUWN. Shortly stated, I consider there is substance to some of the contentions.
[33] I have considered the following cases: Newlands Coal Pty Ltd [2010] FWA 4811 (Roe C - 29 June 2010) (“Newlands No 1”); Newlands Coal Pty Ltd v CFMEU [2010] FWAFB 7401 (per Hamberger SDP and McCarthy DP; Blair C dissenting - 1 November 2010) (“Newlands No 2”); Construction, Forestry, Mining & Energy Union v Deputy President Hamberger [2011] FCA 719 (Katzmann J - 24 June 2011) (“Newlands No 3”); Newlands Coal Pty Ltd v Construction, Forestry, Mining and Energy Union [2011] FWAFB 7325 (per Hamberger SDP and McCarthy DP in separate decisions; Blair C dissenting - 15 December 2011) (“Newlands No 4”); New Acland Coal Pty Ltd [2011] 9075 (Lawler VP - 20 December 2011) (“Acland No 1”); New Acland Coal Pty Ltd [2011] FWAA 9311 (Lawler VP - 23 December 2011) (“Acland No 2”); and Newlands Coal Pty Ltd [2012] FWAFB 721 (Hamberger SDP - 25 January 2012) (“Newlands No 5”).
[34] In addition to these cases, I have considered the decisions to which reference was made in the TWU’s submissions, although they concerned agreements made under different legislation. I have also noted that the Explanatory Memorandum at item 797 explains that in determining whether there are reasonable grounds for believing an agreement has been genuinely agreed to by employees, Fair Work Australia must consider whether the agreement has been validly made in accordance with s.182. In that respect, the Explanatory Memorandum gave as examples a decision to which the TWU referred, namely Construction Forestry Mining and Energy Union v Australian Industrial Relations Commission as well as the decision of Ross VP (as he then was) in Grocon Pty Ltd Enterprise Agreement (Victoria) (2003) 127 IR 13.
[35] Some of the principles in the series of cases concerning the Newlands Coal Surface Operations Enterprise Agreement 2010 (“Newlands Agreement”) arise in relation to the three Aldi agreements as they considered whether a group of employees has been fairly chosen and opting-out arrangements in the context of the better off overall test. Aldi submitted Newlands No 3 supported its submissions that the existence of an opt-out clause in an agreement did not invalidate an agreement, and this had been overlooked in the submissions of the TWU to the extent it contended to the contrary. Aldi also submitted, using a phrase from Newland No 3 at [84], there was no basis for considering that employees should be covered by an agreement “in perpetuity”; and, here, it was submitted, stores would be expected to go into or out of the scope of the agreements. Further, Aldi submitted there was no “material difference” between the Workplace Relations Act agreements and the agreements proposed to be approved under the Fair Work Act, with the result that concerns about scope could be put to one side.
[36] The circumstances considered in the Newlands Agreement and those in the Aldi agreements are not only different but, in my view, plainly distinguishable. That is, the Aldi agreements do not contemplate opting-out at the election or choice of an employee of the type considered in the Newlands Agreement. Rather, the agreements contemplate the unilateral excision of employees from their scope at Aldi’s complete discretion, as well as the addition of employees working in stores presently covered by other Aldi agreements (in contrast with the addition of employees in newly-opened stores). If comparisons may be drawn with the Newlands Agreement, imperfect though they are, the Aldi agreements allow Aldi unilaterally to opt-out of the agreements and apply industrial instruments other than the agreements before Fair Work Australia for approval - relevantly and presently being agreements made under the Workplace Relations Act. That is, in the definitions clause in each of the agreements, the respective regions are described as meaning Aldi’s operations which are nominated by Aldi from time to time as falling within, respectively, the Derrimut, Stapylton and Minchinbury regions. Thus, there can be unilateral expansions and contractions of the scope of the agreements by the allocation of stores to different regions and, potentially at least, on multiple occasions over the life of the agreements. This intention was confirmed in the evidence adduced by Aldi.
[37] By extension of the approach adopted by Katzmann J in Newland No 3 as to opting-out provisions, employees excised from an agreement would be subject to the relevant modern award and would not, therefore, be better off overall because only the award would then apply, whereas s.193 of the Fair Work Act requires that at the test time each award covered employee and each prospective award covered employee would be better off overall. The circumstances here are, however, somewhat different from the situation in Newlands because Aldi’s employees presently would be transferred to other regions which have agreements in place, namely, agreements made under the Workplace Relations Act.
[38] I doubt the agreements were, within the meaning of s.172(2)(a) of the Fair Work Act made with employees who were employed at the time the agreement was made and who will be covered by the agreements; by the terms of the agreements, the employees, at best, might be covered by the agreements, depending on when and whether Aldi determined to excise them from the agreements through regional reconfiguration. I doubt also that employees could be considered to have genuinely agreed with the terms that allow Aldi to employ them pursuant to agreements made under the Workplace Relations Act in lieu of that which they had voted upon in furtherance of making an enterprise agreement under the Fair Work Act. This is what the agreements as put to a vote envisaged in the case of all employees, although it would appear most relevantly to affect the stores employees. In voting in favour of an enterprise agreement made under the Fair Work Act, the employees effectively voted to allow Aldi potentially to employ them instead under a Workplace Relations Act agreement; this could not be considered, in my opinion, to be a matter to which the employees could have genuinely agreed, while also noting that undertakings as to scope have been proposed.
[39] Aldi submitted there are no material differences between the agreements proposed to be made under the Fair Work Act and the agreements made under the Workplace Relations Act, and this should assuage concerns about employees being moved from one region to another. Despite Aldi’s submissions, there are significant material differences. For example, the Prestons Agreement and the Dandenong Agreement do not meet a range of legislative provisions for the approval of an enterprise agreement under the Fair Work Act, such as the inclusion of terms meeting the requirements of s.186(6) (dispute resolution procedure), s.202(1) and s.203 (flexibility term), and s.205(1) (consultation term). As to the resolution of disputes, the Workplace Relations Act agreements provide that a “fellow employee” may “accompany” the employee in any discussions, with the final level in the dispute resolution process being a right to appeal for a review to Aldi’s Managing Director. Moreover, the Prestons Agreement and the Dandenong Agreement were not assessed by Fair Work Australia against the better off overall test under the Fair Work Act, but against a superseded statutory test. The basic pay rates for every classification of hourly rate employee and salaried employee under the Workplace Relations Act agreements are, in varying amounts, lower than under the proposed agreements although some other payments and allowances are the same. Moreover, the Workplace Relations Act agreements do not have a minimum monthly business review payment, albeit such payments were relied on by Aldi as to passing the better off overall test for managerial employees under the proposed agreements. Putting aside the absence of legislatively-required inclusions, it may be accepted that, if considered in isolation from other issues of material difference such as dispute resolution procedures, the pay rates in the Workplace Relations Act agreements would not satisfy the better off overall test. In this regard, some of the rates in the proposed agreements themselves do not pass the better off overall test and Aldi has given undertakings to increase certain rates; it is tolerably clear that the even lower rates in the Workplace Relations Act agreements would not pass the better off overall test.
[40] The TWU submitted there are no cases, including those to which reference was made in the proceedings, which stand as authority for the proposition that an agreement which allows an employer unilaterally to vary its scope in the manner contemplated in the Aldi agreements is a validly-made enterprise agreement under the Fair Work Act. I am inclined to accept this submission as it seems generally inimical to the legislative scheme that employees unilaterally could be removed by an employer from an enterprise agreement made under the Fair Work Act. That being said, it is nonetheless clear that a range of familiar situations may arise over the life of any agreement, some of which are not predictable at the time of the making of the agreement, which can affect which employees remain covered by an agreement and which new employees might become covered by the agreement. I accept, as Aldi’s submissions noted, this is a point unambiguously emphasised in some of the decisions concerning the Newlands Agreement. However, the circumstances here pertaining in relation to the Aldi agreements appear to raise different considerations. Aldi’s practical capacity to alter the scope of the agreements seems to be more akin to a capacity, most relevantly as to stores which participated in the ballots for the agreements, to vary or terminate the agreements in a manner that is inconsistent with those parts of the Fair Work Act concerned with the variation and termination of agreements.
[41] Examples of excision - Minchinbury Agreement: The agreements provide that stores may be excised from the enterprise agreements, and this approach is continued in certain undertakings that have been given by Aldi. The undertakings that have been given in relation to the Minchinbury Agreement, coupled with Aldi’s evidence, provide a useful illustration of the way Aldi agreements operate in practice in relation to regional designation by Aldi.
[42] Aldi proposes in undertakings to exclude from the coverage of the Minchinbury Agreement certain stores which are specifically identified by name in that agreement, as set out in table form annexed to the decision. By way of elaboration, the Minchinbury Agreement specifies rates for employees working in stores which are designated as being central business district, or “CBD” stores. The pay rates for CBD stores are higher than those applicable to non-CBD stores, with an attraction-type component. Among other stores, the agreement names the following stores as CBD stores: Canterbury, Edgecliff, Marrickville Metro and Leichhardt. Aldi, however, would exclude these stores from coverage by the Minchinbury Agreement. Despite the terms of Minchinbury Agreement specifying dedicated CBD rates for these stores, the stores are supplied by the Prestons distribution centre and are thus considered by Aldi to be covered by the Prestons Agreement rather than the Minchinbury Agreement. The Prestons Agreement contains rates for these same stores (apart from Leichhardt, for which there are no rates) which are inferior to those in the Minchinbury Agreement.
[43] Aldi submitted there would be no practical difference for employees working at certain stores named in the Minchinbury Agreement if they were excluded from the agreement, because CBD rates are applied uniformly to stores Aldi determines to treat as being CBD stores irrespective of which agreement is used. In my view, a matter that relevantly arises for consideration is not the amount of the rates, or the entirely discretionary way in which Aldi may determine to apply those particular rates. Rather, I cite the CBD stores as an illustration of the way in which Aldi may excise certain stores from an agreement, even though, on its face, the agreement specifies dedicated pay rates for employees working in those named stores. On a separate matter, being a matter not related to the consideration of the approval of the applications, the practical difference for employees would be likely to become apparent if enforcement proceedings concerning entitlements were initiated by or on behalf of an employee or group of employees.
[44] The Leichhardt store may be used by way of further example as to the fluid way Aldi treats the scope and coverage of industrial instruments. The Leichhardt store is not named as a CBD store in the Prestons Agreement 2009, but it is named as a CBD store in the existing Minchinbury Agreement 2008 as well as in the proposed Minchinbury Agreement. Aldi’s evidence indicated the Leichhardt store should have been included in the Prestons Agreement 2009, but it was omitted in error - and that the Leichhardt employees receive CBD rates. Although the Leichhardt store is specifically named in both the existing Minchinbury Agreement 2008 and the proposed Minchinbury Agreement as a CBD store, employees at the Leichhardt store did not participate in the ballot for the Minchinbury Agreement and Aldi’s undertakings as to the scope of the Minchinbury Agreement exclude the Leichhardt store. As a result, Leichhardt employees would not have an entitlement to CBD rates under the terms of either the Prestons Agreement 2009, or, if the undertakings as to scope were accepted, under the proposed Minchinbury Agreement. The Leichhardt employees would not be identified under any agreement as a CBD store, other than as unilaterally may be determined by Aldi.
[45] Fairly chosen: I am required to consider s.186(3) and s.186(3A) of the Fair Work Act concerning the fairly chosen requirement and whether the group is geographically, operationally or organisationally distinct. It must be accepted that the regions, which are autonomous profit centres, are operationally and organisationally distinct given the evidence adduced by Aldi supporting that conclusion. All the agreements operate in New South Wales, but the groups appear to be largely geographically distinct at present given the driving distances for the deliveries from the distribution centres. The respective agreements are expressed to apply, and are intended to apply, to employees who work within the discrete regions known as the Derrimut region, the Stapylton region, and the Minchinbury region with the distribution centre hubs and stores they supply. I also consider there would be any range of perfectly legitimate business-related reasons as to why Aldi may determine to declare stores to be part of one region rather than another. There was no suggestion in the proceedings that regions would be reconfigured for any ulterior motives. See also items 777 and 778 of the Explanatory Memorandum.
[46] Notwithstanding these conclusions, the fairly chosen issue is clouded given the amorphousness of the group for each agreement. The composition of each group can be expanded or contracted at any time entirely at Aldi’s discretion, most relevantly in relation to stores employees. I have considered the TWU’s submission that as the Minchinbury Agreement group is variable at Aldi’s discretion that group is both unknown and unknowable, with the result Fair Work Australia could not be satisfied the group was fairly chosen. I have considered the submissions of the NUWN as to existing employees and prospective employees within one organisational area being subject to different industrial arrangements, with the result that the group would not have been fairly chosen. I have also considered the comments in Construction, Forestry, Mining and Energy Union v Pilbara Iron Company (Services) Pty Ltd [2011] FCAFC 91 concerning s.327 of the Workplace Relations Act, which provided that: “An employer may make an agreement (an employee collective agreement) in writing with persons employed at the time in a single business (or part of a single business) of the employer whose employment will, or would but for the operation of an ITEA that has passed its nominal expiry date, be subject to the agreement.” The Federal Court said:
“45. In the end, the feature of s 327 most significant to its construction is the use of the preposition “in”. The fact that the employees with whom the agreement is made must be employees “in” a single business or part of a single business is the clearest indication that the identification of the part of the single business (if that is the choice made) must be separate from the identification of the persons employed in it. The part of the single business concerned cannot simply be the employees with whom the employer has chosen to make the agreement. The part must be identifiable by reference to factors other than the employees themselves or the date they acquire that characteristic. The part cannot be constituted simply by those employees whom the employer has chosen as the other parties to the proposed agreement. This conclusion leads to the proposition that the part of a single business must itself be a recognisable section, segment or constituent of the business, consistently with the ordinary and natural meaning of the word “part”. The alternative construction, that a “part of a single business” is wide enough to include any of the employees employed in the business, selected on any basis whatsoever, including when they became employees, does not conform with the ordinary meaning. Moreover, Pilbara Iron’s principal argument, that the agreement was valid because it was formed with employees in the single business, would render the words “part of a single business” redundant. Indeed, if Pilbara Iron’s position were correct, the references to both “a single business” and “part of a single business” would be superfluous. It would be sufficient to provide for an agreement with persons employed at the time whose employment will be subject to the agreement, as the Fair Work Act has done in the case of enterprise agreements.”
[47] The underlying purpose of the fairly chosen requirement seems to favour the TWU’s submissions and those of the NUWN. I also note that in Newlands No 4 at [21]-[25], the consideration of the opt-out provision and s.186(3) and s.186(3A) placed emphasis on the choice of each employee as to whether to be covered by the Newlands Agreement, whereas there is no such choice for Aldi’s employees. I am nonetheless inclined, but not without hesitation, to reject the submissions that even if it were accepted the group for the Minchinbury Agreement is determinable as the group of employees in the Minchinbury region, Fair Work Australia should find that the group is not fairly chosen because it is a group that is variable at Aldi’s complete discretion. The agreements themselves specify that the respective regions are Aldi’s operations which are nominated by Aldi from time to time as falling within the respective region, thereby contemplating alterations to the group of employees within each region. As I have noted, these regions are geographically, operationally or organisationally distinct, albeit the composition can be altered by movement of stores into or out of the region. The regions are, however, “identifiable by reference to factors other than the employees themselves”.
[48] Fairly chosen - maintenance engineers - Derrimut: As to the Derrimut Agreement, the initial and amended employer’s declarations in support of the application for the approval of the agreement indicated it is intended to cover all operational employees working in stores, warehouse and transport, and, among other matters, provided information about the classification of maintenance engineer. The Derrimut Agreement does not, however, deal with the pay and conditions for maintenance engineers at all, with the result that the agreement which was said to cover all operational employees deals with the pay and conditions for all such employees except maintenance engineers. Senior counsel for Aldi submitted, on instructions, that no maintenance engineers are employed at the Derrimut distribution centre. I consider it improbable that the Derrimut distribution centre, unlike the Stapylton and Minchinbury distribution centres, could operate without the employment of maintenance engineers over the life of the Derrimut Agreement. In any event, the instructions given to senior counsel were contradicted by the evidence before Fair Work Australia in the form of the initial and amended statutory declarations in support of the application and other evidence describing matters relevant to Derrimut’s maintenance engineers. The omission of this classification of employee leads me to the view that, as to the Derrimut Agreement, the employees have not been fairly chosen including by reference to geographic, operational or organisational distinctness.
Miscellaneous matters
[49] Start and end dates of the agreement: Section 186(5) of the Fair Work Act provides that Fair Work Australia must be satisfied that an agreement specifies a date as its nominal expiry date and the date will not be more than four years after the day on which Fair Work Australia approves the agreement. The TWU submitted that employees could not determine either the start and finish dates of the Minchinbury Agreement by reference to the terms of the agreement itself or by reference to the Minchinbury Agreement 2008. As to this submission by the TWU, it may be noted that in the “Impact Statements”, provided by Aldi to explain the agreements, employees were informed the respective agreements will commence from March 2012 when the current agreements made under the Workplace Relations Act expire. By the terms of cl.4 of the agreements, the respective agreements will commence seven days after approval by Fair Work Australia, or on the expiry of the relevant existing instrument made under the Workplace Relations Act, whichever occurs later. The advice in the Impact Statements as it concerned the expiry of the Workplace Relations Act agreements appears, give or take a day in late-March or early-April, to be accurate, given the evidence as to Workplace Authority correspondence dated 31 March 2008 concerning two of the agreements and 1 April 2008 for the other. In the proceedings, Aldi submitted the agreements should commence from 1 April 2012.
[50] As to the issue of the expiry date for the agreements and the requirements of s.186(5), in Newland No 4 Hamberger SDP (with McCarthy DP agreeing) concluded:
“[28] Subsection 186(5) requires that the agreement must specify a date as its nominal expiry date; and the date will not be more than 4 years after the day on which FWA approves the agreement. Clause 4 of the agreement specifies that the agreement shall commence 7 days after it has been approved by FWA and shall nominally expire 2 years from commencement. The CFMEU submitted that the agreement does not specify its nominal expiry date as required by s.186(5).
[29] It is common for enterprise agreements to express their nominal expiry date by reference to the end of a period of time after the agreement’s commencement or approval. There is no ambiguity in such an approach and it allows the provisions of the Act relating to the nominal expiry of agreements to work effectively. I consider that clause 4 of the agreement meets the requirement contained in s.186(5).”
[51] I accept it is common for agreements to express their nominal term as described in the quote from Newlands No 4 at [29] and I am, in any event, bound by that decision as to the operation of s.186(5) of the Fair Work Act. I nonetheless observe, in passing, that the formulation used in the Aldi agreements potentially can be problematic, in the sense of defeating the legislative intent underlying specification as to a nominal expiry date, if the date of the approval of an agreement is not reasonably proximate to the date on which it was made - as illustrated by the eventual nominal expiry date for the Newlands Agreement consequent upon its substantially delayed approval date following the appeals.
[52] I do not think that much of substance turns on the start and end date issue advanced by the TWU in relation to the question of whether the agreement could be considered to have been genuinely agreed.
[53] Employees who will be covered by the agreement - AWA employees: On a separate matter as to s.172 of the Fair Work Act and the employees “who will be covered by the agreement”, it may be noted that the agreements purport to deal with the remuneration of AWA-covered employees. That is, cl.5 of the agreements reads as follows in relation to employees working under AWAs:
“Employees covered by Australian Workplace Agreements at the time of this Agreement is approved will continue to work in accordance with the AWA until the AWA is validly terminated. Where hourly rates of pay applicable under each employee’s AWA exceed the rates of pay for that employee’s classification as listed in this Agreement, those AWA hourly rates of pay will continue to form the basis of remuneration for that employee and will continue to be reviewed in accordance with Clause 13 of this Agreement.” [My italics]
[54] Thus, the agreements purport to deal with remuneration for AWA employees. However, by operation of item 30(1) of Sch 3 of the Fair Work (Transitional and Consequential Amendments) Act 2009, employees to whom AWAs apply are not employees who will be covered by the agreements.
[55] Conditional terminations - AWA employees: No conditional terminations of AWAs accompanied the applications for the approval of any of the agreements. In response to written queries I raised on 19 January 2012 as to whether AWA-covered employees participated in the ballots, Aldi subsequently adduced evidence as to correspondence to the Stapylton AWA-covered employees. The Stapylton AWA-covered employees were advised that those who signed certain documents were permitted to participate in the vote for the Stapylton Agreement, with the result that those who did not sign were not permitted by Aldi to participate in the ballot for that agreement. The submissions indicated that 40 employees covered by AWAs signed documents. There was no evidence as to correspondence advising which AWA-covered employees were permitted to participate in the ballots for the Derrimut Agreement and the Minchinbury Agreement.
[56] The initial documents were not executed in the terms required by item 18 of Sch 3 of the Fair Work (Transitional and Consequential Amendments) Act, and thus were legislatively ineffective. Aldi has proposed to correct its initial failure to accompany the applications for the approval of the agreements with conditional terminations in recently seeking to effect the proper execution of conditional terminations. It is unclear why the original documents did not accompany the applications for the approval of the three agreements in the first place, as Aldi’s evidence otherwise indicated that it had only recently come to attention that the documents signed in 2011 were ineffective. In any event, Aldi requested that the proceedings be adjourned for three weeks after the proceedings on 27 January 2012 to facilitate the execution and filing of conditional terminations. Aldi subsequently filed 27 conditional terminations in relation to the Stapylton Agreement, 44 for the Derrimut Agreement and 27 for the Minchinbury Agreement. The initial documents signed in 2011 were also filed.
[57] On being advised on 27 January 2012 that conditional terminations were in the process of being arranged, I enquired of senior counsel for Aldi how conditional terminations could belatedly be completed. The submissions were to the effect that no difficulties were presented in this approach. Notwithstanding Aldi’s arrangements from around late-January 2012, I doubt that legislatively-specified conditional terminations concerning the agreements could be effected between Aldi and the employees in 2012 given the ballots were conducted in 2011. Even accepting that the earlier documents plainly are to be considered to have indicated the parties’ wishes, the legislative requirements concerning the execution of conditional terminations are mandatory. I put it no higher than an observation, but if AWA-covered employees participated in the ballots for the agreements, but Aldi and the AWA-covered employees did not execute conditional terminations in the legislatively-required terms prior to the ballots, then, in consequence, the ballots may have been characterised by invalidity and the ballot outcomes potentially may be void or voidable.
Better off overall test
[58] While the TWU and the NUWN raised concern about Aldi’s capacity to determine rates of pay pursuant to cl.5, little was advanced as to the particular provisions of the agreements and the assessment of the better off overall test. The submissions of all the union bargaining representatives, including the SDA and the NUW, indicated they would “defer” to the assessment made by Fair Work Australia in such respects. Senior counsel for Aldi submitted that the evidence of, for example, spread sheet calculations demonstrated that the employees would be better off overall under the agreements. Further, contrary to the submissions of the TWU that the agreements did not have moral authority and authenticity, Aldi submitted the agreements had the employees’ balloted imprimatur and there was no need to be “paternalistic” given the processes that led to the making of the agreements, being agreements with no obvious deficiencies. The TWU submitted that Fair Work Australia has a significant legislative task to undertake in assessing agreements, and the fact employees voted in favour of an agreement is immaterial to that task. The TWU submitted that Fair Work Australia is bound to assess an agreement according to its terms, and what it provides and allows; that the employees voted in favour of an agreement does not axiomatically mean they would be better off overall being employed under it.
[59] Clause 5 - different hours of work and pay arrangements: Clause 5 of each agreement provides that Aldi may engage employees under different hours of work and pay arrangements. The agreements provide that, in such circumstances, “an appropriate rate of pay will be set” taking into account the existing rates of pay for that classification, hours required to be worked, and the “requirements of the Act in relation to rates of pay”. The agreements provide that these roles may be offered to employees, and employees accepting these roles will otherwise continue to be “bound” by the terms of the agreements and relevant schedules. Aldi submitted that the purpose of the clause was, for example, to determine payments for employees in circumstances such as where the remuneration for a part-time employee would be proportionally adjusted based on, say, a classification having rates of remuneration under the agreements for 50 contract hours a week.
[60] The agreements contain casual stock replenisher classifications with a specified hourly rate of pay, but no other casual classifications or casual loadings. Aldi has given undertakings that no further casual classifications will be created under cl.5 of the agreements, but the TWU submitted these are only qualified undertakings. The TWU submitted it may be assumed these provisions would be applied with full force. The TWU also submitted the deficiency presented by cl.5 of the agreement is so fundamental that it is not apt to correction by undertakings; and the undertakings, in any event, are inadequate because cl.5 is not limited to casual employees. The NUWN submitted cl.5 is an opting-out provision; and that it is of a type distinguishable from that in the Newlands Agreement, given, particularly, the element of employer unilateralism rather than the “strong reliance on choice” in relation to the Newlands Agreement. Both the TWU and the NUWN submitted that the existence of this provision was fatal to the application for the approval of the Minchinbury Agreement.
[61] On a plain reading of the provisions, cl.5 of the agreements is not constrained in the manner described in Aldi’s submissions. Given the capacity for Aldi to alter conditions such as the hours of work and pay arrangements in the manner contemplated in cl.5 of the agreements (e.g., engagement of employees under an expanded or different spread of ordinary hours and pay arrangements thereto, attended by an appropriate rate of pay being set by Aldi - perhaps in consultation with the employee, or perhaps not - having regard to matters including the requirements of the Fair Work Act), I could not be satisfied as to the better off overall test because I do not know what arrangements may be struck under this provision in each of the agreements. The assessment of the better off overall test cannot be delegated to Aldi although this seems to be suggested by cl.5 of the agreement in as much as there is reference to “the requirements of the Act”; or it may, for example, be intended as a reference to s.206 of the Fair Work Act as it concerns base rates of pay. That the employees would continue to be, as it is put in the agreements, “bound” by the agreements and the schedules does not displace the right that is reserved under cl.5 to engage employees under what Aldi considers to be an appropriate rate of pay and under hours arrangements that differ from those in the agreements, except as with the modification in the undertakings concerning the creation of additional classifications of casual employees. Further, adopting the approach of Roe C in Newlands No 1 at [31], I do not consider there could be an effective and enforceable way to prevent the exertion of unfair influence on an employee to accept terms determined by Aldi pursuant to alternative arrangements under cl.5 of the agreements, particularly at the point of engagement.
[62] Pay rates: Aldi’s own modelling indicated that the rates for certain employees under the Stapylton Agreement would not satisfy the better off overall test at the test time. I should note that I have reviewed, and provided to the parties, other mathematically-based modelling prepared within Fair Work Australia which suggests that the financial disadvantage under the Stapylton Agreement, at some levels, would be greater than that identified in Aldi’s modelling. One way or the other, Aldi itself acknowledged that the Stapylton Agreement did not, at the test time, pass the better off overall test for certain employees. Further, the rates of pay for certain casuals, such as those for casual stock replenishers under the Minchinbury Agreement, objectively do not pass the better off overall test when considered over the transitional period. Aldi has given undertakings to increase certain wage rates from a notional date of 1 January 2012, being a date that does not correlate with the test time but is a date before the agreements’ proposed commencement. Senior counsel for Aldi submitted the undertakings would ensure that the employees concerned would be better off overall as at the date of approval of the relevant agreements. An agreement that does not meet the better off overall test at the test time, which is a point in time test, may not be approved. If the agreements were otherwise capable of being approved, I would have invited further submissions in relation to the test time criterion concerning the rates that Aldi has subsequently unilaterally determined to propose as substitute rates.
[63] Part-time employees: The agreements deal with the pay and conditions for two types of part-time employees. The first category of part-time employee has a guarantee of payment for a specified number of contracted hours and is defined as meaning an employee who works fewer than 38 hours a week on average. The second category of part-time employee is a limited roster employee, defined as being an employee who is not available to be rostered on any five out of seven days in a week; the employee nominates the days on which he or she is available to work, and may be rostered to work at any time on those days.
[64] I have a particular concern about the part-time arrangements under the agreements in relation to the stores employees as against the General Retail Industry Award (“the award”). The award deals with part-time employment in the following terms:
“12. Part-time employees
12.1 A part-time employee is an employee who:
(a) works less than 38 hours per week; and
(b) has reasonably predictable hours of work.
12.2 At the time of first being employed, the employer and the part-time employee will agree, in writing, on a regular pattern of work, specifying at least:
12.3 Any agreement to vary the regular pattern of work will be made in writing before the variation occurs.
12.4 The agreement and variation to it will be retained by the employer and a copy given by the employer to the employee.
12.5 An employer is required to roster a part-time employee for a minimum of three consecutive hours on any shift.
12.6 An employee who does not meet the definition of a part-time employee and who is not a full-time employee will be paid as a casual employee in accordance with clause 13.
12.7 A part-time employee employed under the provisions of this clause will be paid for ordinary hours worked at the rate of 1/38th of the weekly rate prescribed for the class of work performed. All time worked in excess of the hours as agreed under clause 12.2 or varied under clause 12.3 will be overtime and paid for at the rates prescribed in clause 29.229.2 [sic]—Overtime. ...”
[65] Aldi submitted there was no doubt the part-time employment arrangements under the agreements move from a different concept than as provided in the award. That is, the concept is one of fixed income for a nominated number of hours and a guarantee that if the hours are not provided in one month then they will be in the next. Aldi also submitted these arrangements had been requested by the employees.
[66] Under the agreements, hourly rate part-time stores employees have specified contract hours and are advised of the maximum number of hours that will be paid at the bankable hourly rate, which can be varied only by agreement with the employee. Under the agreements, employees do not, however, have the benefit of the significant industrial protections provided by cl.12 of the award, such as specification as to the hours worked each day, the days of the week the employee will work, and the actual starting and finishing times each day. There is no minimum daily engagement for part-time employees under the agreements. Further, overtime payments under the agreements are attracted only where the hours exceed the ordinary hours specified for full-time employees and, where such payments are attracted, overtime is paid at a flat rate of time-and-one-half for all hours worked, whereas under the award overtime is attracted for all time worked in excess of the part-time hours as agreed under cl.12.2 or varied under cl.12.3. Moreover, the overtime rates under the award are calculated on a daily basis, specified at time-and-a-half for the first three hours and double time thereafter; double time on a Sunday; and double time-and-a-half on a public holiday.
[67] Under the initial monthly pay roster arrangements, the agreements provide that hourly rate limited roster stores employees must be available to be rostered at least nine weekday shifts a month, plus up to two Saturday and two Sunday shifts a month. Limited roster employees are required to nominate the weekdays on which they are available to be rostered at any time. Limited roster employees also may be requested to work additional shifts as ordinary hours on other days not nominated by the employee, but may refuse this request. Aldi submitted that all these provisions do is to allow an employee to consider additional shifts in consultation with his or her supervisor.
[68] Thus, limited roster employees are required to be available on a certain number of weekdays, Saturdays and Sundays; and at any time on such days. Limited roster employees under the agreements do not have the protections provided by the award as to matters such as the hours worked each day, which days of the week the employee will work, and the actual starting and finishing times of each day; and there is no minimum engagement provision. Further, in terms reminiscent of preferred hours arrangements, limited roster employees may agree to work on days additional to those they have nominated as being available and, pertinently, may agree to work any such shifts as ordinary hours: see Bupa Care Services Pty Ltd [2010] FWAFB 2762. On a plain reading of the agreements, limited roster employees may agree to perform work on additional shifts as ordinary hours irrespective of the hour of the day, day of the week or whether on public holidays.
[69] Under the agreements, the part-time employees who are classed as limited roster employees are a type of hybrid between part-time employees (e.g., they have entitlement to certain benefits associated with non-casual employment) and on-call casual employees (e.g., they do not have entitlement to the certainties as to an agreed, documented, regular pattern of work and concomitant entitlements to overtime payments for hours outside the agreed hours of part-time work and penalty rate payments). Further, limited roster employees may agree to work any hours at the ordinary hourly time rate on days other than the days they have to be available.
[70] Clause 12.6 of the award deals with matters in the following way: “An employee who does not meet the definition of a part-time employee and who is not a full-time employee will be paid as a casual employee in accordance with clause 13 of the award”, which is, subject to transitional arrangements, 25 per cent on the rates in the award. Clause 29.4(c) of the award also provides certain penalty payments for casuals of an additional loading of 100 per cent for all hours worked on a Sunday instead of the casual loading in cl.13.2 of the award, whereas the agreements specify an additional payment of $9.00 an hour.
[71] I should note, for completeness, that Aldi tendered spreadsheets with payment calculations concerning, among other classifications, part-time employees and limited roster employees. Some of the assumptions in Aldi’s calculations are invalid, given that the award provides overtime payments for work performed beyond the part-time hours that a part-time employee works and the award otherwise specifies that employees will be paid the casual employee rate if they do not meet the award definition of a part-time employee. That is, the award specifies that if the arrangements under which an employee is engaged do not meet the definition of a part-time employee, and the employee is not a full-time employee, then the employee “will” be paid as a casual employee. Under the arrangements in the agreements, none of Aldi’s employees would meet the award definition of a part-time employee and, therefore, will be paid as casual employees if employed in accordance with the award. The pay rates for the agreements’ part-time employees are lower than the rates the employees would be paid under the application of the award in such respects; and the rates for the limited roster employees are lower again.
[72] I raised a concern about the arrangements under the agreements for part-time employees at the initial listing, and before the TWU and NUWN had articulated their broader concerns. I expressed the view that part-time employment under the agreements was an area in relation to which undertakings would be required, were the agreements to be approved. I raised the matter in subsequent proceedings, again suggesting consideration of undertakings. Aldi has not provided any undertakings as to part-time employees, including its limited roster part-time employees. Aldi submitted that no undertakings should be sought in relation to part-time employees, being a proposition I do not accept given the concerns I have as to part-time employees under the agreements apropos part-time employees under the award and the better off overall test.
National Employment Standards
[73] The bodies of the agreements contain provisions which indicate that the full-time hours of work under the agreements are 38 hours a week. Notwithstanding those provisions in the bodies of the agreements, the schedules to the agreements, which deal substantively with the arrangements for different classifications of employees and which override certain provisions in the bodies of the agreements to the extent of any inconsistency, specify certain standard hours formulations which well-exceed 38 hours a week and multipliers of 38 hours a week, plus reasonable additional hours. For example, the agreements deal with hours in terms of formulations including set hours of 50 hours a week. In the definition dealing with what are described as “notional shift hours”, the contract hours are specified in formulations of up to 208 contract hours a month. In the case of transport and distribution employees, including drivers of B-double vehicles, the agreements specify 217 ordinary hours a calendar month, with overtime payments being provided for working additional hours that exceed 217 ordinary hours. In relation to some classifications, such as warehouse employees, average additional hours must be agreed on commencement of employment and those hours may not thereafter be varied except with Aldi’s consent.
[74] Aldi’s submissions drew attention to the remuneration received by, for example, the warehouse employees in response to matters going to the hours arrangements, being remuneration which exceeds the rates that would be attracted under the relevant award. Aldi also submitted that the hours needed to be considered in the context of averaging, whereby an employee might work 50 hours in one week but fewer than 50 in another week. The TWU submitted that the National Employment Standards, as they concern hours, are not primarily concerned with rates, but, rather, with a standard of 38 hours; and where hours additional to the hours specified in the National Employment Standards may be refused. The TWU submitted that, on the face of the agreements, there was no right to refuse such hours and employees could be directed or required to work such hours, with a refusal potentially resulting in adverse employment consequences.
[75] The agreements contain arrangements concerning hours of work which, it seems to me, exclude, or are otherwise antithetical to the underpinnings of, the National Employment Standards as specified in s.62 of the Fair Work Act. In what constitutes an inversion of the approach adopted to ordinary hours plus reasonable additional hours in the National Employment Standards, the agreements stipulate standard formulations of contract hours and ordinary hours which, for example, exceed those contained in the National Employment Standards. For some classifications, the agreements provide that set additional hours must be agreed upon at the commencement of employment and further provide that those set hours, including set hours exceeding those contained in the National Employment Standards, subsequently may not be reduced to, say, 38 hours, without Aldi’s concurrence - irrespective of, for example, dynamic considerations such as an employee’s changeable health and personal circumstances, including family responsibilities.
Undertakings
[76] The undertakings given by Aldi for the three agreements are broadly similar, but with agreement-specific differences. As to the undertakings, the SDA advised it had reviewed the undertakings and did not have any issues concerning the undertakings in relation to any of the three agreements. The NUW advised that it did not wish to raise any objections or concerns in relation to the undertakings concerning the Derrimut Agreement. As to the employee bargaining representatives, Ms Pearson advised she was happy that the scope of the Stapylton Agreement had been more clearly defined, but disagreed with salaried employees and hourly rate employees being covered by the same agreement. Ms Critsilis and Ms Shelly confirmed they had no comment to make in relation to the undertakings concerning the Derrimut Agreement.
[77] The NUWN submitted, as already outlined in this decision, that the undertakings do not address its concerns. The TWU submitted the Minchinbury Agreement is fundamentally invalid and Aldi’s undertakings do not, and cannot, remedy the concerns in such respects. The TWU elaborated its additional concerns about the undertakings dated 27 January 2012 by submitting that the undertakings deal only with a specific issue of a loss of conditions for employees removed from the coverage of the agreement. The advantage of coverage by a collective agreement, the submissions continued, extends beyond pay to the comfort of being part of a group with shared interests and the comfort of being part of an extended bargaining unit. This might be a marginal issue in cases of opt-out by consent, but is significant when an employee or employees can be removed unilaterally from an agreement. This disadvantage extends to employees remaining within an agreement’s coverage, who may find their bargaining power reduced by that fact. The undertakings are ambiguous and, even taken at their highest, are inadequate to remedy the deficiencies of the agreement. The TWU noted that Aldi relied on the series of decisions regarding the Newlands Agreement and submitted the decisions departed from previous Federal Court authority. The TWU submitted that the Minchinbury Agreement travels well beyond the arrangements in the Newlands Agreement. Unlike the Newlands Agreement, the Minchinbury Agreement allows Aldi unilaterally to remove “swathes of employees” from the coverage of the agreement. The agreement, if approved with the undertakings, would “radically re-define” an enterprise agreement under the Fair Work Act, even compared to the Newlands Agreement.
[78] Scope undertakings: Aldi has given undertakings as to the proposed scope of the enterprise agreements. I did not seek undertakings in the terms proposed by Aldi as to a scope undertaking, and there may be some question as to whether they could be accepted given the operation of s.190(1)(b) as it concerns s.186 and s.187 of the Fair Work Act. In any event, given that Aldi has proposed these undertakings, I would say the following. The effect of the undertakings, in short, is to provide that the respective enterprise agreements will cover all non-stores employees and those existing stores employees whose stores are transferred to a region where a Workplace Relations Act agreement applies. The undertakings list the stores within the scope of the respective agreements as at 1 December 2011, and note that the stores may be allocated to a different region. There are no undertakings concerning employees recruited into stores which participated in the ballots for the Fair Work Act agreement after a regional reconfiguration; the Workplace Relations Act agreement would apply to the their employment.
[79] One feature of the scope undertakings is that existing employees would have the relevant proposed agreement cover them following transfer, rather than a Workplace Relations Act agreement. Given I have concluded that the proposed agreements do not pass the better off overall test, I do not consider it necessary to give further consideration to the undertakings having a savings-type effect. Further, although I raised with senior counsel for Aldi concerns about the prospect of some employees at the one store being employed under a Fair Work Act agreement and others under a Workplace Relations Act agreement as a result of the acceptance of Aldi’s undertakings, and Aldi’s submissions relied in part on approval of the Newlands Agreement, no undertakings have been proposed by Aldi that deal with the position prospective employees concerning “free choice” as to whether they wish to be covered by the agreements, or have their employment conditional on agreement as to which employment arrangements would apply to them. The provision of undertakings to that effect appears, in part, to have led to the decision in Newlands No 5 to approve the Newlands Agreement, although the circumstances are once again distinguishable due, for example, to the existence of the Workplace Relations Act agreements and the terms of the agreements contemplating varied scope.
[80] Aldi’s submissions confirmed that if the undertakings were accepted it would be expected that employees (say store replenishers, working shoulder to shoulder and performing identical duties in the one store which had participated fully in the ballot for the Fair Work Act agreements), being subject to different agreements. That the existing employees would continue to be covered by the Fair Work Act agreement and the employees who were recruited after regional transfer would be covered by a Workplace Relations Act agreement was confirmed in response to queries from me to senior counsel for Aldi. Senior counsel submitted this would be the outcome and, further, that such an outcome is envisaged by the Fair Work Act; and that there “will always be changes”. While I have a range of reservations about the situation that would unfold via the acceptance of undertakings in this respect, I accept Aldi’s submission that the Fair Work Act squarely envisages employees being employed under different industrial instruments within the one workplace and, following the transfer of a store, the undertakings, were they to be accepted, would operate as a savings-type provision - which are commonplace in industrial instruments to address changed industrial exigencies in an employer’s operations.
[81] The undertakings as to the scope of the Derrimut Agreement in excluding maintenance engineers were not satisfactorily explained in circumstances where all other evidence filed or tendered by Aldi referred to employees in this classification. The classification may have been overlooked in that particular agreement.
[82] Other miscellaneous undertakings: Aldi has given undertakings that no new casual classifications will be created pursuant to cl.5 of the agreements. I accept the TWU’s submission that these are qualified undertakings. The undertakings do not satisfactorily address my concern about the employment of employees under terms and conditions Aldi may determine under cl.5 of the agreements, even if the clause does not invalidate the agreements.
[83] The cashing-out of annual leave provisions in the agreements do not conform with the requirements in s.93 of the Fair Work Act and undertakings have been given to better-align the cashing-out with the statutory requirements. I have accepted undertakings as to such matters in the past. Considering, however, the recent decisions in Norstar Recycling Pty Ltd T/A Norstar Steel Recyclers [2012] FWAA 386 and John Holland and the Australian Workers’ Union Western Highway Agreement [2012] FWAA 1778, the cashing-out of leave provisions may be of no effect if they do not meet the requirements of the Fair Work Act and, on the basis of those decisions, this may not be remedied by undertakings but would not impede approval.
[84] Aldi has given undertakings to incorporate job search entitlements in connection with certain terminations of employment, being entitlements which are largely common to the awards that otherwise would apply. I would accept the undertakings, other than to note the undertakings appear to contain some mis-numbering of clauses which would need correction.
[85] Aldi has given undertakings to improve the notice provisions for employees aged over 45 years and to provide casuals certain unpaid leave, so as to bring the agreements into conformity with the minima in the National Employment Standards. I would accept the undertakings.
[86] Aldi has given undertakings that regardless of its entitlements under the agreements unilaterally to determine not to apply the redundancy provisions of the agreements where it obtains acceptable alternative for an employee, it will pay the employee at least in accordance with the National Employment Standards unless Fair Work Australia has reduced the payment pursuant to an application under s.120 of the Fair Work Act. The scales of severance payments in the agreements are higher than those in the National Employment Standards. At some age and service levels, the severance payments in both the National Employment Standards and in the agreements appear to be inferior to those which would apply transitionally in relation to relevant employees (see, for example, cl.15.5 of the General Retail Industry Award and cl.33(4) of the Shop Employees (State) Award AN120499). All three agreements are intended to operate in New South Wales. The undertakings contemplate redundancy payments lower than those that apply transitionally and, thus, appear to raise better off overall considerations as to certain classes of employees made redundant. I doubt these undertakings may be accepted, although, if approval were otherwise being given, amended undertakings would have been appropriate.
[87] The dispute resolution procedures in the agreements may not meet the requirements of s.186(6) of the Fair Work Act and, in consequence, Aldi has given undertakings as to representation. I would accept those undertakings.
[88] The agreements contain provisions which are acknowledged by Aldi to be contrary to Commonwealth and State laws. Those matters concern, as to Commonwealth laws, the agreements’ provisions which purport to allow Aldi to make unauthorised deductions (c.f. Pt 2-2, Div 2 of the Fair Work Act as to lawful deductions). 6 As to casual employees, the agreements purport to exclude them from entitlements which would arise under certain State long service leave laws, being non-excluded legislation. Senior counsel for Aldi submitted that his client would comply with the law; and it was thus effectively inappropriate to provide undertakings indicating that Aldi would indeed comply with the law. Despite these submissions, undertakings as to such matters were, in the end, given by Aldi. However, the initial submissions were persuasive - given, more particularly, my further consideration as to the matters in relation to which undertakings properly may be accepted, namely, as to a concern an enterprise agreement does not meet the requirements set out in s.186 and s.187 of the Fair Work Act. See also s.192 as to laws of the Commonwealth and Armacell Australia Pty Ltd [2010] FWAFB 9985 as to State long service leave laws.
[89] Certain agreement rates of pay did not satisfy the better off overall test as at the test time. Aldi has given undertakings to increase some rates of pay. As noted earlier in the decision, I would have sought additional submissions in relation to this aspect of the undertakings were the agreements otherwise capable of being approved.
[90] Lastly, no undertakings have been proposed by Aldi in relation to aspects of the agreements where I raised concern, namely, hours in the context of the National Employment Standards and part-time employee arrangements. Absent any other considerations, I would not consider the agreements could be approved without undertakings to address the concerns in relation to those discrete areas.
Conclusion
[91] The submissions by the TWU and the NUWN went to a number of matters that I have not dealt with in this decision. I do not consider it is necessary, however, to deal with all the matters of objection. I have concluded the agreements have not met the requirements for approval, even if they could be considered to be agreements within the meaning of the Fair Work Act. The undertakings do not otherwise address my concerns.
[92] I am obliged to dismiss the applications.
COMMISSIONER
Appearances:
G Hatcher SC with A Perigo of counsel, and M McNaughton, solicitor, for ALDI Foods Pty Limited as General Partner of ALDI Stores (A Limited Partnership) (All Agreements).
A Snowball for the National Union of Workers (Derrimut Agreement).
S Mueller and M Valentin for the National Union of Workers, New South Wales Branch (Minchinbury Agreement).
J Fox and P Walker for the Shop, Distributive and Allied Employees’ Association (All Agreements).
O Fagir for the Transport Workers’ Union of Australia (Minchinbury Agreement).
M Critsilis, employee bargaining representative - written submission (Derrimut Agreement).
C Shelly, employee bargaining representative - written submission (Derrimut Agreement).
L Pearson, employee bargaining representative - written submission (Stapylton Agreement).
Hearing details:
2011.
Sydney:
November 29.
December 8.
2012.
Sydney:
January 27.
Final written submissions: 20 February 2012 (Derrimut Agreement).
Prestons Agreement 2009 Included as CBD stores |
Minchinbury Agreement 2008 Included as CBD stores |
Minchinbury Agreement 2012 Included as CBD stores |
Minchinbury Agreement 2012 Participation in ballot - Affidavit 24/01/12 at para 22 and evidence 27/01/12 |
Affidavit 24/01/12 Status |
Included in undertakings as to scope of Minchinbury Agreement 2012 |
Brookvale |
Brookvale |
Brookvale |
24/01/12 Participated 27/01/12 Participated |
Served by Minchinbury DC and covered by Minchinbury Agt |
Brookvale included |
Canterbury |
Canterbury |
Canterbury |
24/01/12 Did not participate 27/01/12 Did not participate |
Served by Prestons DC and covered by Prestons Agt |
Canterbury not included |
X |
X |
Chatswood |
24/01/12 Did not participate 27/01/12 Participated |
Not included in Prestons Agreement as not declared a CBD store until after Prestons Agt was finalised |
Chatswood included |
Edgecliff |
Edgecliff |
Edgecliff |
24/01/12 Did not participate 27/01/12 Did not participate |
Served by Prestons DC and covered by Prestons Agt |
Edgecliff not included |
Manly Wharf |
Manly Wharf |
Manly Wharf |
24/01/12 Participated 27/01/12 Participated |
Served by Minchinbury DC and covered by Minchinbury Agt |
Manly Wharf included |
Marrickville Metro |
Marrickville Metro |
Marrickville Metro |
24/01/12 Did not participate 27/01/12 Did not participate |
Served by Prestons DC and covered by Prestons Agt |
Marrickville Metro not included |
X |
X |
Mona Vale |
24/01/12 Did not participate 27/01/12 Participated |
Not included in Prestons Agreement as not declared a CBD store until after Prestons Agt was finalised |
Mona Vale included |
North Sydney |
North Sydney |
North Sydney |
24/01/12 Participated 27/01/12 Participated |
Served by Minchinbury DC and covered by Minchinbury Agt |
North Sydney included |
X |
Leichhardt |
Leichhardt |
24/01/12 Did not participate 27/01/12 Did not participate |
Should have been included in the Prestons Agt but was omitted in error. Employees receive CBD rates. |
Leichhardt not included |
X |
X |
Top Ryde |
24/01/12 Did not participate 27/01/12 Participated |
Not included in Prestons Agt as not declared a CBD store until after Prestons Agt was finalised |
Top Ryde included |
ACT |
X |
X |
24/01/12 Did not participate 27/01/12 Did not participate |
Served by Prestons DC and covered by Prestons Agt |
ACT not included |
1 Workplace Agreement Stapylton 2008, known as the Stapylton Agreement 2008. AC313949, CAEN084750096.
2 Workplace Agreement Derrimut 2008, known as the Derrimut Agreement 2008. AC313985, CAEN084767503.
3 Workplace Agreement Minchinbury 2008, known as the Minchinbury Agreement 2008. AC313948, CAEN084750109.
4 There are two agreements with different provisions on the Fair Work Australia website titled Aldi Stores Dandenong Agreement 2009, known as the Dandenong Agreement 2009. The first version is AC328741, CAEV096215495-1 with the footnoted date of 25/09/2009. The second version is AC328432, CAEN096215495 with the footnoted date of 4/01/2010. Aldi applies the first version. It is unclear why there are two versions and why the footnoted dates post-date the enactment of the Fair Work Act.
5 Workplace Agreement Prestons 2009, known as the Prestons Agreement 2009. AC317318, CAEN095807568.
6 As a separate issue, see also s.172(1)(c) of the Fair Work Act concerning permitted matters under an enterprise agreement as to deductions authorised by an employee under an enterprise agreement.
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