Some employees disadvantaged but majority approved agreement

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Some employees disadvantaged but majority approved agreement

A group of casual workers involved in customer service work were disadvantaged by a new agreement that improved the pay of certain food and beverage workers who voted for its approval — with a 68% ‘yes’ vote of participating employees.

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A group of casual workers involved in customer service work were disadvantaged by a new agreement that improved the pay of certain food and beverage workers who voted for its approval — with a 68% ‘yes’ vote of participating employees.
 
Fair Work Australia (FWA) found that the agreement’s coverage was fair because the coverage satisfied the Fair Work Act 2009 ‘fairly chosen’ test. Disadvantaged employees in this circumstance should seek a separate scope order — as noted below.
 
The customer service workers were previously covered by AWAs and had not had an increase in pay for six years.
 
Vice-President Lawler noted that some improved conditions were involved — increases in public holiday and weekend penalty rates — but that customer service weekly employees would suffer a reduction in take-home pay. The Vie-President continued:
‘Why the AWU would agree to such an outcome is not clear to the objectors or, for that matter, to me …’
Test passed
 
Vice President Lawler noted the fact that customer service employees had endured a six-year wage freeze and that at least some of them now faced a pay cut, but that this did not of itself provide a basis for rejecting the agreement.
 
The Vice-President stated that the Act required the tribunal to approve an agreement if it passed the no-disadvantage test or BOOT — compared to the relevant reference instrument — even if it would make workers worse off compared to the previous agreement.
 
The commentary section of the Explanatory Memorandum for the Fair Work Bill 2009 stated:
‘Once an agreement has received employee approval, FWA will ensure that:
  • there is genuine agreement;
  • the group of employees covered by the agreement was fairly chosen;
  • the agreement passes the “Better Off Overall Test” (BOOT);
  • the agreement contains a nominal expiry date and dispute settlement clause;
  • the agreement does not contain terms that contravene the NES; and
  • the agreement does not contain unlawful content.’
Disadvantaged employees — scope order option 
 
Vice-President Lawler indicated an avenue of redress for employees disadvantaged in such circumstances as long as they act before the agreement is made:
‘The real remedy for a subgroup of employees, such as the customer service employees in this case, who perceive themselves to be unfairly disadvantaged by a proposed agreement, is for one or more of their bargaining representatives to seek a scope order under s 238.
 
Such an order can be sought if bargaining is “proceeding … unfairly” because “the agreement … will cover employees that it is not appropriate for the agreement to cover”. In circumstances where there is a clear risk of the tyranny of the majority prejudicing the minority in a proposed agreement, it may well be open to FWA to find that if bargaining is proceeding unfairly towards the minority this makes it inappropriate that they be covered by the agreement and appropriate to make a scope order.
 
This will no doubt be cold comfort to … the … objectors in this case in circumstances where it may be presumed that none of those employees had a sufficient knowledge of the legislative regime to appreciate that applying for a scope order was the course they should have followed.
 
Under s 238(1), a scope order is only available in relation to a “proposed agreement” and, therefore, not in relation to an agreement that has been made (an agreement is made the day on which the voting process by which employees approved the agreement concludes: see s 182).
 
Necessarily, the Agreement had been made before the present application for approval was lodged and so a scope order is no longer available in relation to the customer service employees.’
 
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