Duckinwilla Farms v Employees of Duckinwilla Farms [2004] QIRC 101 (2004) 176 QGIG 160

160 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 11 June, 2004 ######################################################################################################################### ## QUEENSLAND INDUSTRIAL RELATIONS COMMISSION Industrial Relations Act 1999 – s. 156 – certification of an agreement Duckinwilla Farms AND Employees of Duckinwilla Farms (CA207 of 2004) DUCKINWILLA FARMS – CERTIFIED AGREEMENT 2004 COMMISSIONER B.J. BLADES 31 May 2004 Certified Agreement – Application for certification – Cashing out of leave entitlements – Banked time arrangements – Short lunch break – Employee induction program – Definition of serious misconduct – Annual increments depend upon unilateral decision of employer – Probationer of less than 3 months’ service denied sick leave – Entitlement to overtime reduced – Serious disadvantages identified – Agreement returned to the parties. DECISION -- 1 of 4 -- 11 June, 2004 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 161 The employer is Mr and Mrs Mark Wical who operate a farm at Howard and trade as “Duckinwilla Farms”. On their behalf, Mr Paul Westbury sought certification of an agreement made with employees. Mr Stuart Claxton made himself available as the employee representative during the Commission proceedings. The Award against which the “no-disadvantage” test is to be compared is the Fruit and Vegetable Growing Industry Award – State 2002 (the Award). In moving for the certification of the Agreement, Mr Westbury explained that the Agreement was required by the employer for the purposes of providing more flexible work practices that balanced the interests of organisational, client and employee requirements. He said that the employer recognised the itinerant nature of the farming industry and the requirement to employ large numbers of people for short periods of time whilst requiring the employees to work longer hours during that short period. He also said that the employer recognised that local employees may have no further employment following the end of the season and would like the opportunity to bank hours worked outside of the ordinary hours during the season and take those banked hours on a regular basis after the season had finished, thereby providing an ongoing income stream. Mr Westbury submitted that, although there are no full- time employees at present (all employees being on a casual basis), existing employees would transfer to full-time. He said the Agreement provided an opportunity for them to do so and to still keep their hourly rate (an additional 23%) applicable to casual employment. He submitted that the benefits to the employees included: 1. A wage increase of 2.5% on 1 September each year, or the annual safety net adjustment, whichever was the greater amount. 2. Two annual wage increments based upon the employee’s performance at the end of the first and second years of employment with the employer. 3. Flexibility in working arrangements, including a banked time arrangement to allow employees to maximise the balance of work and family commitments. 4. An opportunity for full-time and part-time employees to be paid at 23% loading in lieu of leave entitlements. 5. An opportunity for the employees at their own request, to work a fifteen minute lunch break to enable them to go home early. 6. An employee induction program designed to assist new employees to settle into the new work environment with ease. 7. A clear description of the meaning of “serious misconduct” that may lead to summary dismissal. From questions directed to the employee representative, it was clear that the business did not employ any full-time workers. Mr Claxton said he had been employed for 6 years as a casual. When I asked what advantages he was to obtain from the Agreement, Mr Claxton informed me “job security” and could not see any disadvantages. The claim about increased job security should be measured against the length of employment Mr Claxton enjoyed as a casual. An agreement passes the no-disadvantage test if it does not disadvantage employees – s. 160 Industrial Relations Act 1999 (the Act). An agreement does not have to positively provide for advantages for employees before it can be said to comply with s. 160. Under ss. (2), an agreement disadvantages employees only if the Commission considers it would result in a reduction in the employees’ entitlements or protections. Those “entitlements or protections” include those under a relevant Award or Chapter 2 of the Act, Chapter 2 providing for, inter alia, sick leave, annual leave, public holidays and bereavement leave – ss. (6). I hold a number of concerns with the proposed document: 1. In clause 8.3, a full-time employee, by mutual agreement with the employer, may elect to receive an amount of 23% in lieu of annual leave, sick leave, long service leave, bereavement leave and statutory holidays. It is noted that under s. 41 of the Act, the provision regarding bereavement leave (because bereavement leave is included in Part 2 of Chapter 2) has effect despite the fact that an industrial instrument provides for something less favourable to the employee. In other words, the entitlement to bereavement leave cannot be cashed out. Moreover, under s. 10 of the Act, an employee is entitled to at least 8 days’ sick leave on full pay and whether cashing out is permitted or not, his Honour the President made reference to the cashing out of sick leave in Wade Sawmill Pty Ltd v Ussher (2003) 173 QGIG 1029 when he said: “Notwithstanding that the current Certified Agreement relevantly reproduces earlier certified agreements and with due respect to those who have certified them, there is an issue about whether a ‘cashing out’ clause which does not require the preservation of a minimum quantity of leave in the ‘leave bank’ can satisfy the no disadvantage test.”. While these remarks were obiter, they raise for serious consideration the question whether sick leave can be cashed out. The same can be said for the cashing out of annual leave, the entitlement to which is to be found in s. 11. Section 160(4) of the Act provides that ss. (2) relating to a reduction in employee entitlements, does not apply if the Commission considers that, in the context of the employment conditions considered as a whole, the reduction is not against the public interest. An example is provided at the foot of the sub-section but no “public interest” argument has been mounted in this case. In Oceanarium Services (North Queensland) Pty Ltd v Australian Workers’ Union of Employees (1994) 145 QGIG 666 a Full Bench of the Commission, admittedly applying earlier legislation, permitted a partial cashing out of annual leave. In the joint judgment of Commissioners Bougoure and Nutter it was said: “We do not see the approval of the above proviso as an endorsement of the general proposition that annual leave can be ‘cashed in’. There are sound reasons why employees should avail themselves of a reasonable period of paid annual leave.”. Commissioner Fisher was also a member of the Full Bench and in a separate judgment found the concept of cashing out annual leave entitlements contrary to general industrial principles. The submission that “banking” hours of work is sufficient to provide for paid time off does not assist the sick leave concerns. Moreover, banked time is also able to be cashed out under the Agreement. 2. Clause 8.4 of the Agreement makes similar provisions in relation to part-time workers and it seems to me that equal considerations would apply. 3. Clauses 9, 11 and 16 of the Agreement refer to policies of the employer. These should be attached to the Agreement in compliance with Practice Note No 6. -- 2 of 4 -- 162 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 11 June, 2004 4. Clause 11.1 of the Agreement defines what is meant by “serious misconduct” which entitles the employer to dismiss summarily, i.e. without notice or payment in lieu of notice. There are fourteen categories identified and it is unnecessary to detail all of them but they include sexual harassment, discrimination, breach of the confidentiality agreement and intellectual property agreement, smoking in designated non-smoking areas, spitting, abuse, malingering, and prolonged (more than three days) absence from work without explanation. Reliance was placed upon s. 30CA of the Workplace Relations Regulations 1996, a Federal enactment. The relevant State provision is s. 83 which identifies theft, assault and fraud but does not identify other conduct except that which “would make it unreasonable to require the employer to continue the employment during the notice period”. At common law, to justify a summary termination on the ground of serious misconduct would require conduct of such gravity and importance as to indicate a rejection or repudiation of the contract, conveying the employee’s intention to regard himself/herself as no longer bound by it. While it cannot be doubted that the parties to a contract are entitled to agree on anything (even a definition of serious misconduct), the question is whether there is a disadvantage. There are degrees of sexual harassment and discrimination which, in the particular circumstances of a case, may very well not justify a summary dismissal, yet the Agreement purports to give that right to the employer for any such conduct. I think the same can be said for smoking, spitting and abuse. It is unlikely they would normally be classified as serious misconduct. 5. Under clause 11.2 of the Agreement an employee is required to give to the employer two weeks’ notice of termination or forfeit two weeks’ pay. The Award (clause 4.9.3) only requires two days’ notice. The period of notice required by the Agreement to be given by the employer is only one week’s notice for an employee with less than 1 year’s service. I asked Mr Claxton whether he knew that the Award only provided for 2 days’ notice. While he said he did, I asked him whether it was an advantage or a disadvantage and he replied: “Well, it’s never bothered me really and it hasn’t been brought up in any of the – the – none of the other employees have brought it up to me.”. In view of those remarks, one is left wondering as to the nature of the information that was provided to the employees when s. 144(2)(b) of the Act, relating to the provision of information by the employer, was being complied with. 6. Clause 13.2 of the Agreement makes a provision for redundancy pay. This provision is much less than the Commission’s current standard although it is conceded that the provision generally follows the current Award provision. There is however in clause 13.5 of the Agreement, an exemption where the employer employs less than 15 employees. Mr Claxton advised me that the number of employees during the busy season is about 13 all up. The redundancy clause would have no application at all. As a casual, Mr Claxton, with 6 years’ service, will soon be entitled to long service leave – after 10 years’ service, vide s. 43(2) and a proportionate amount after 7 years under s. 43(3). The loss of that entitlement in exchange for an increase in pay of 23% appears to me to be somewhat of a disadvantage. The length of service of other employees is not in evidence. The annual increments, relied upon as a benefit, which amount to $10 per week, payable after the first year of employment and another $10 payable after the second year of employment are solely dependent “upon satisfactory completion of a performance appraisal by the employer”. They might never be paid. They depend upon the unilateral assessment (opinion) of the employer. A wage increase of 2.5% or the amount of the annual safety net adjustment is nothing more than what the law would compel. Employees, by entering the Agreement, are receiving nothing extra, just their entitlements. A recent Federal Wage Case decision awarded employees in the order of 4%. As to the provision regarding the “banking” of hours, the Agreement provides that hours worked in excess of ordinary working hours may be banked on an hour for hour basis to a maximum of 160 and if subsequently paid out rather than taken, are paid out on an hour for hour basis. In either case, it results in a denial to employees of the benefit of the overtime provisions in the Award, i.e. time and a half for the first three hours and double time thereafter. There is a provision, clause 20.3 in the Agreement whereby employees work up to 12 ordinary hours on any one day. This is to be contrasted with the Award, clause 6.4.1 which provides for the payment of overtime after 8 ordinary hours are worked. Employees thus lose the entitlement to 4 hours’ overtime. A question has to be asked whether it is healthy for an employee to take 15 minutes for lunch, which clause 24.1 of the Agreement makes provision for. Clause 25.1 of the Agreement provides for annual leave of “4 weeks (152 hours)”. That provision is inconsistent with the hours of work clause in the Agreement (i.e. 40 hours in clause 20.1 and 20.2) and with the hours of work clause in the Award (40 hours in clause 6.4.1). Clause 7.1.1 of the Award provides for 5 weeks’ annual leave in the case of certain employees on shift work although this Agreement makes no mention of shift work. Clause 26.1 of the Agreement provides that employees on probation (in their first 3 months) will be entitled to 3 days’ sick leave only after the probation period has expired and that employee has become a permanent employee. That provision conflicts with s. 10(2)(b) of the Act which entitles an employee to at least 1 day’s sick leave on full pay for each completed 6 weeks of employment. The provision in the Agreement appears incapable of standing, for while a certified agreement prevails to the extent of any inconsistency in an award [s. 165(1)], I am of the view it does not prevail over an inconsistent provision in the Act. Finally, it was suggested that the employee induction program, designed to assist new employees to settle into the new work environment was somehow of benefit to the employee. That might be so but probably more so, it is of benefit to the employer. Mr Westbury submitted that other similar agreements had been certified in the Commission. That might also be so but their certification does not bind me for I am unaware of the facts and circumstances that might have applied in those cases and these matters I have mentioned may not have even been considered. An agreement passes the no-disadvantage test if it does not disadvantage employees in relation to their employment conditions. It is not a mathematical or accounting exercise and quality of life considerations are clearly matters to be taken into account. Permanency of employment as opposed to casual employment is worthy of consideration in applying the test but these considerations must be real, not illusory. The provisions of the Agreement must be considered as a whole and in doing so I am unable to come to any conclusion other than the employees of Duckinwilla Farms will suffer significant disadvantages, which are not outweighed by the advantages, if this Agreement is certified. Section 156 of the Act provides that the Commission must not certify an agreement unless it is satisfied that the Agreement passes the no-disadvantage test. Section 158(1)(b) of the Act requires the Commission to provide the parties to the Agreement an opportunity to take necessary action to enable certification. The application for certification is therefore adjourned to a date to be fixed and I give an indication that such date will be not longer than one month hence. The parties will be contacted in due course. -- 3 of 4 -- 11 June, 2004 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 163 B:\GAZETTES\INDUSTRIAL\2004\JUNE\04-06-11\QGIG_JUN11.DOCQGIG_Jun11.DOC B.J. BLADES, Commissioner. Hearing Details: 2004 27 May Appearances: Mr P. Westbury, Westbury Consulting, with him Mr M. Mical, for Duckinwilla Farms. Mr S. Claxton, employee’s representative. Released: 31 May 2004 -- 4 of 4 --