Adcome Pty Ltd T/A Cornetts Supermarkets

[2019] FWCA 548

[2019] FWCA 548

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.225 - Application for termination of an enterprise agreement after its nominal expiry date

Adcome Pty Ltd T/A Cornetts Supermarkets
(AG2018/6443)

CHARLEVILLE IGA (MEAT) UNION COLLECTIVE AGREEMENT 2009 AND OTHERS

Retail industry
COMMISSIONER SPENCER	BRISBANE, 31 JANUARY 2019

Application for termination of Meat Union Collective Agreements.

[1] An application pursuant to s.225 of the Fair Work Act 2009 (the Act) was made by Adcome Pty Ltd T/A Cornetts Supermarkets (the Applicant) to terminate the following agreements (the Agreements):

•  Charleville IGA (Meat) Union Collective Agreement 2009 (AC327960);

•  Mareeba Supa IGA (Meat) Union Collective Agreement 2009 (AC326710);

•  Oakey Supa IGA (Meat) Union Collective Agreement 2009 (AC326827);

•  Port Douglas Supa IGA (Meat) Union Collective Agreement 2009 (AC326716); and

•  St George Supa IGA (Meat) Union Collective Agreement 2009 (AC328840).

[2] The Agreements are collective agreement-based instruments that have passed their nominal expiry dates (1 May 2013).

[3] Further, ss.225 and 226 of the Act relevantly provide:

“225 Application for termination of an enterprise agreement after its nominal expiry date

If an enterprise agreement has passed its nominal expiry date, any of the following may apply to the FWC for the termination of the agreement:

(a) one or more of the employers covered by the agreement;

(b) an employee covered by the agreement;

(c) an employee organisation covered by the agreement.

226 When the FWC must terminate an enterprise agreement

If an application for the termination of an enterprise agreement is made under section 225, the FWC must terminate the agreement if:

(a) the FWC is satisfied that it is not contrary to the public interest to do so; and

(b) the FWC considers that it is appropriate to terminate the agreement taking into account all the circumstances including:

(i) the views of the employees, each employer, and each employee organisation (if any), covered by the agreement; and

(ii) the circumstances of those employees, employers and organisations including the likely effect that the termination will have on each of them.”

[4] The Shop, Distributive and Allied Employee’s Association (SDA) and the Australian Workers’ Union (AWU) are the employee organisations covered by the Agreements.

[5] Ms Brigid McGrath, the General Manager (Human Resources and Safety) of the Applicant, filed Statutory Declarations in support of the Application. The Applicant seeks the termination of the Agreement as it no longer suits the business purposes and structure of the Applicant. Ms McGrath confirmed that upon termination of the Agreements, the relevant employees would be covered by the General Retail Industry Award 2010 (the Award).

[6] Annexed to her Statutory Declaration, Ms McGrath submitted copies of letters sent to the employees of the Applicant regarding the proposed termination. These letters contained some information regarding a comparison of pay rates under the Agreement and the Award.

[7] Initial Directions were issued, requiring that the Applicant provide further information addressing the criteria in s.226 of the Act.

[8] The Applicant provided further supporting documentation, and a further Affidavit in response to the Directions.

[9] Further Directions were set for the filing of additional submissions, to particularly address the steps taken by the Employer to inform the employees and seek their views regarding the termination, in accordance with s.226(b)(i) and (ii) of the Act.

[10] The Applicant filed materials in response to these Further Directions.

[11] The Applicant’s submissions and Affidavits confirmed that:

•  The Agreements have passed their nominal expiry dates;

•  Termination of the Agreements is not contrary to the public interest as operational requirements have changed since their implementation. The Applicant submits that termination of the Agreements is not inappropriate and would allow for a more consistent application of conditions across their various retail stores, and will ensure that the Applicant’s workplace practices meet current industrial requirements;

•  Written communication to the Applicant’s employees provided that:

“…since 2010 and the introduction of the General Retail Industry Award 2010 (Award), it is our view that the Agreements have become less relevant and less applicable to Cornett’s current working practices.

In many respects, the General Retail Industry Award appears to provide more favourable terms and conditions of employment than either of the Agreements. These more favourable terms include:

•  Ordinary hours of work from 7.00am to 6.00pm, rather than 6.00am to 12.00am, with penalty rates applied before 6.00am and after 6.00pm;

•  Higher penalty rates applied on Sunday;

•  A higher penalty rate for casuals;

•  Casuals benefit from recent changes to the Award which now pays overtime and penalties for early starts (before 7.00am Monday to Saturday and 9.00am on Sunday) and late finishes (after 9.00pm in early trading stores and after 11.00pm in late trading stores);

•  A significant increase in meal allowance; and

•  An increase in kilometre reimbursements, if you use your own car for business purposes.”

•  No financial detriment will be suffered by the any of the employees; and further, where termination of the Agreements would impact the entitlements of the employees, the Applicant confirmed it has entered into a Memorandum of Understanding with trade unions, to ensure the employees maintain better conditions in relation to the affected clauses. This includes those team members with five and ten year service rates of pay receiving an all-purpose allowance in order to maintain their base rate of pay, which is not provided for under the Award. The comparison of wage rates provided to the employees set out the rates to be on termination of the Agreement;

•  By ensuring the relevant stores are operating under the one instrument (the Award), this would allow for greater productivity and efficiency for the staff, and provision of better service to the local community;

•  The views of the employees and relevant Unions have been sought, and they support the Applicant’s application to terminate the Agreements. Steps were taken to inform the employees and seek their views, as follows:

•  A notification of intent to terminate the Agreement was provided to the employees;

•  Discussions were held at team talks across a number of sessions in order to cover all shifts;

•  A sign off sheet was posted, requesting team members to sign in acknowledgment they had received communication regarding the proposed termination, and whether they had any objections, and the majority of the employees signed as having no objections;

•  Postings of the communications and Memorandum of Understanding were posted on notice boards, and copies displayed in tea rooms;

•  Individualised letters were sent to each employees, informing of the proposed termination of Agreements;

•  In written correspondence to the employees, the Applicant stated:

“Changes to Wages

If the Agreement is terminated, your wage rate will also be impacted. Clause 5.3 Rates of Pay and 5.4 Service Pay, in the Agreement cover wages. When we first announced our intention to apply to terminate the Agreement, we provided all team members with a personalised letter which stated your current rate of pay, and the new rate of pay under the Award. This letter also contained changes to job title.

In general, casuals will be better off working under the Award, as the casual loading will increase from 23% to 25%.

Permanent team members wage rates will be slightly worse off under the Award during ordinary hours, particularly those with 5 and 10 year service rates. To ensure that no permanent team member is disadvantage [sic] by a lower base rate of pay, an all-purpose allowance will be provided to ensure that permanent team members are paid at least the same rate of pay earned under the Agreement.

To assist team members understand how their week wage may vary, below we have provided examples of how payments are made under the Agreement in comparison to the Award for a selection of rosters”.

•  Employees were invited to submit questions and feedback to the Applicant and the relevant union (the SDA), in the two weeks prior to submission of the application; and

•  In response to the Further Directions, the employees were emailed, to their personal addresses, a copy of the Directions of the Commission, the Applicant’s application and supporting Statutory Declaration including any relevant appendices, and a comparative spreadsheet of the rates of pay under the Agreement and the Award.

Memorandum of Understanding

[12] The Applicant has received correspondence from the AWU and the SDA advising they have no objection to the application for termination of the Agreements.

[13] The Applicant entered into a “Memorandum of Understanding” (the Memorandum) with the SDA and AWU, confirming that after termination of the Agreements, the Applicant’s employees would be covered by the Award. The Memorandum provided that the Applicant undertakes to maintain clauses 4.2 – Redundancy, 6.1.2 – Saturday Work, 6.1.4 – Sunday Work, 6.1.5 regarding work performed on Monday to Friday after 6pm and before 6am, 7.4.5 – Proof of Absence, 7.2.11 – Annual Leave, 7.7 – Blood Donors Leave, 7.9 – Defence Force Leave, 7.14 – Emergency Service Leave, and 8.2 – Safe Transport Home of the Agreements. Further, the Applicant undertakes to continue to pay public holiday penalty rates in accordance with clause 7.1 of the Agreements, until 6 months following termination of the Agreements, following which the Award and/or the NES will apply for public holiday conditions.

Conclusion

[14] Taking into account the information provided in response to the matters in s.226 of the Act, 1 and in accordance with the above submissions, and support of the AWU and SDA and the associated matters in the Memorandum between the parties, the material satisfies the legislative requirements that the termination of the Agreements is appropriate. The termination will take effect from 31 January 2019.

[15] Orders [PR704423] terminating the Agreements will issue together with this Decision.[16]
[17]
[18]

COMMISSIONER

 1   Aurizon Operations Limited; Aurizon Network Pty Ltd; Australia Eastern Railroad Pty Ltd [2015] FWCFB 540.

Printed by authority of the Commonwealth Government Printer

<PR704411>