Fair Work Commission quashes sham enterprise agreement
The Full Bench of the Fair Work Commission (‘FWC’) has quashed the approval of Mantle Group Hospitality’s Hot Wok Food Makers Workplace Agreement 2021 (‘the Hot Wok Agreement’). In finding that the agreement was incapable of having been ‘genuinely agreed to’, the Full Bench noted the employer’s “deliberate manipulation of the statutory process of making enterprise agreements”, with the General Manager of the FWC referring Mantle Group’s HR Manager to the Australian Federal Police for potential criminal prosecution.
You can read the full decision of United Workers’ Union v Hot Wok Food Makers Pty Ltd  FWCFB 4 here.
The Hot Wok Agreement won the approval of the FWC’s then Deputy President Amanda Mansini in 2021. Soon after, Mantle Group began to move workers from the zombie deal Staff Services Pty Ltd Certified Agreement (‘Staff Services Agreement’), a non-union agreement form the early 2000s that had allowed Mantle Group to avoid paying penalty rates, to the recently approved Hot Wok Agreement.
In December 2021, an employee made an application to the Fair Work Commission to terminate the Staff Services Agreement. Upon being contacted by the Commission, a number of employees sent emails supporting the termination and reporting that when news of the ‘complaint’ had come out, Mantle Group had attempted to transfer them to the Hot Wok Agreement. Commissioner Hunt of the FWC found it appropriate to terminate the Staff Services Agreement labelling it a “disgrace” which had “knowingly deprived a large number of employees of penalty rates, to which they would have otherwise been entitled under the relevant award”.
Turning her attention to the replacement Hot Wok Agreement, Commissioner Hunt commented that the Agreement could “never satisfy the BOOT” (the “better off overall test”) due to a clause allowing Mantle Group to pay workers ordinary rates – even when entitled to penalty rates – where they had entered into a ‘voluntary hours’ arrangement.
Soon after, the United Workers Union (UWU) appealed the 2021 decision to approve the Hot Wok Agreement on the grounds that:
- the Agreement did not pass the Better Off Overall Test (BOOT);
- the Agreement was not genuinely agreed to by the relevant employees covered by the Agreement;
- the group of employees covered by the Agreement was not fairly chosen.
Despite a delay in filing the appeal, the Full Bench granted an extension of time, citing the “interests of justice” and “overwhelming merit” of the grounds of appeal.
The Hot Work Agreement did not pass the better off overall test (BOOT)
The Full Bench agreed with the UWU’s assertion that the Hot Wok Agreement was incapable of passing the BOOT as required under s 186(2)(d) and s 193 of the Fair Work Act 2009 (Cth) (‘FW Act’).
The primary issue considered was the impact of the voluntary hours clause of the agreement, which waived penalty rate entitlements where employees had voluntarily requested certain hours.
The Full Bench agreed with Hot Wok’s characterisation of the Agreement as a loaded rates agreement, meaning that employees who entered ‘voluntary hours’ arrangements received higher rates of pay in compensation for waiving their entitlements to penalty rates. While such arrangements do not necessarily fall afoul of the BOOT, with respect to this Agreement and the common practices and arrangements of Mantle Group Hospitality, the Full Bench found the Hot Wok Agreement significantly deficient.
In particular, the FWC noted that although the Agreement offered a higher base rate of pay than the award entitlement, it made no provision for wage rises, ultimately resulting in lower rates of pay than those in the relevant awards.
They further raised difficulties in distinguishing between ‘directed’ and ‘voluntary’ overtime, an issue complicated by Mantle Group’s practice of transferring employees from the soon to be terminated zombie Staff Services Agreement and requiring them to participate in voluntary hours arrangements as part of that transfer.
Ultimately, the Full Bench held that the “Hot Wok Agreement fails the BOOT, and it fails by a very wide margin”.
The Hot Wok Agreement was not genuinely agreed to by relevant employees
The Full Bench further found that the Hot Wok Agreement had not been genuinely agreed to by a group of employees that would be covered by the Agreement, as required under s 186 and s 188 of the FW Act.
The group of employees covered by the Agreement was not fairly chosen
Despite attempting to portray themselves as carrying out basic bar/hospitality or clerical work, the four employees who had been listed by the HR manager as having voted to accept the Agreement, were found by the Commission to not fall under any relevant classification contained under the Agreement. Rather, the voting pool was comprised of exclusively managerial staff including two venue managers, an area manager and a payroll manager.
The Bench stated that:
“The selection of four relatively high-paid managers to ‘make’ the Hot Wok Agreement was part of a deliberate manipulation of the statutory process for making enterprise agreements. Their approval of the agreement, which was subsequently to apply to a host of employees who were not to be given the opportunity to bargain or vote, was entirely lacking in authenticity and moral authority”.
In considering oral evidence provided by the four employees, the Full Bench found that they - with the exception of one - lacked credibility with “numerous inconsistencies, improbabilities and evasions in the evidence given”. One employee failed to recall the location of the voting process, how he voted, or even whether he was alone at the time that the vote took place.
From the evidence provided, the Bench deduced that the two information sessions and the voting meeting, which the HR manager claimed he and the four employees attended, never took place.
HR Manager found to be “deliberately misleading” the Commission
When asked to give evidence before the Commission, HR Manager Mr Latham refused to answer almost all questions relating to declarations he made in the course of approving the Hot Wok Agreement, for fear of self-incrimination.
Regardless, the Full Bench found that he was “involved in a deliberate misleading of the Commission” regarding his compliance with directions given by Deputy President Mansini.
At the time the Hot Wok Agreement was first approved, Mr Latham was directed to provide a statement of Commissioner Harper-Greenwell to any transferring employee covered by the Staff Services Agreement. In demonstrating compliance with this direction, the Commission was provided with an email attaching the Deputy President’s statement which was sent to 10 employees.
On the evidence before them, the Commission determined that at best one, and perhaps none, of those employees were covered by the Staff Services Agreement. The Bench concluded that the email “was constructed to deceive the Commission into believing that Hot Wok had complied with its direction”.
The Bench further found that there was ample evidence to conclude that the information provided by Mr Latham in his declarations with respect to information sessions, the voting process and the composition of the voting pool was “false or misleading”.
The Bench noted that providing false or misleading information to the Commission was an offence under ss 137.1 and 137.2 of the Commonwealth Criminal Code and that:
“the process for considering applications for the approval of enterprise agreements would break down entirely if, in every case, the Commission was required to ‘go behind’ and investigate for itself the truth of the matters asserted in such declarations”.
Following a request to the General Manager of the FWC, Mr Latham was referred to the Australian Federal Police for criminal prosecution.
The decision approving the Hot Wok Agreement was quashed.
The Hot Wok decision demonstrates how the statutory process for the creation of workplace agreements between employers and employees is heavily reliant on the integrity and honesty of both parties in complying with the requirements of the legislation.
In this instance, the Full Bench has demonstrated its ability and willingness to overturn agreements that fail to meet those requirements and to ensure businesses and individuals who fail to comply with the law are held to account.
Get help from an employment lawyer
If your workplace has an enterprise agreement, or is in the process of negotiating an agreement, and you have any concerns about the process and protection of your rights and entitlements, you should speak with your union or one of our award-winning employment lawyers.
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