Can we have an 'all-up rate' in our agreement?

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Can we have an 'all-up rate' in our agreement?

In our new agreement we'd like to have an 'all-up' rate which compensates for all wages and allowances. Would this breach the National Employment Standards and pass the BOOT?

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In our new agreement we'd like to have an 'all-up' rate which compensates for all wages and allowances. Would this breach the National Employment Standards and pass the BOOT?
 
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Q Our company is currently in negotiations involving a new enterprise agreement. The majority of issues have been settled, however, the main outstanding issue relates to the payment of wages as an “all-up” rate. The rate is based on an hourly rate which compensates for all wages and allowances: In addition, the gross annual benefits arising from the award and the National Employment Standards (NES) are aggregated to produce a flat rate of pay representing the total hours paid and the inclusion of a number of components, including annual leave.
 
Industry practice is to work some overtime on some weekdays and overtime an average of two Saturdays out of three, throughout a calendar year, and this is also included in the all-up rate. The employees’ bargaining representative has queried whether the agreement would pass the BOOT because the all-up rate includes compensation for annual leave, personal/carer’s leave, public holidays, etc.
 
The NES does not provide for these entitlements to be paid in such a fashion, although they would be receiving the monetary equivalent of these entitlements. Would this condition in the proposed agreement breach the NES?

A This issue has been determined by the Fair Work Commission (FWC) in a number of matters, including a recent decision. The contention is whether there is a breach of the NES annual leave provisions if payment is not made at the time of taking the leave. As with the other decided matters, the proposed enterprise agreement contained terms with pre-paid annual leave in a loaded hourly rate which resulted in an employee not receiving payment when absent from work on annual leave.

The full bench held that employers are required to pay annual leave within the same pay cycle the leave is taken, and the pay cycle must be at least monthly in frequency (or otherwise in accordance with a modern award or enterprise agreement).
 
The full bench agreed with the reasoning in a judgement handed down in 2012 by the Federal Court.
 
Consequently, an all-up rate which compensates for annual leave, or any other form of paid leave, prescribed under the NES, would fail the better off overall test (BOOT).
 
See Canavan Building Pty Ltd [2014] FWCFB 3202; Construction, Forestry, Mining and Energy Union v Jeld-Wen Glass Australia Pty Ltd [2012] FCA 45.

NES

 
The NES applies to each employee regardless of the terms of enterprise agreement. This means where an employee is seeking the approval of a proposed enterprise agreement that provides terms less beneficial to an employee than prescribed under the NES, the terms of the relevant condition under the NES will prevail.

Personal/carer’s leave

 
As this decision determined that it was not permissible to include annual leave in an employee’s all-up rate, similar reasoning could also apply to paid personal/carer’s leave under the NES. While the FWAct (s101) permits the cashing out of personal/carer’s leave, any term of an enterprise agreement must comply with the following conditions:
  • Paid personal/carer’s leave must not be cashed out if the cashing out would result in the employee’s remaining accrued entitlement to paid personal/carer’s leave being less than 15 days;
  • Each cashing out of a particular amount of paid personal/carer’s leave must be a separate agreement in writing between the employer and the employee;
  • The employee must be paid at least the full amount that would have been payable to the employee had the employee taken the leave that the employee has foregone.
A term which cashed out all of an employee’s personal/carer’s leave (in an all-up rate) would not comply with these conditions and would be invalid.
 
Long service leave
 
A similar situation would apply with respect to long service leave. State or Territory long service leave laws are not subject to variation by the terms of the agreement. A term of an agreement which purports to reduce an entitlement under State or Territory long service leave legislation has no legal effect in any way.
 
For example, a term in an enterprise agreement that allows cashing out of long service leave is invalid where it is contrary to the relevant state or territory statute. See St Marys Rugby League Club Ltd [2010] FWA 8300.
 
Apart from South Australian long service leave legislation, no other state or territory statute permits cashing out of long service leave. Consequently, apart from South Australia, payment of long service leave in an employee’s all-up rate would breach the relevant state or territory law. 
 


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