Alice Joy Renfrey
[2024] FWCA 1572
•30 APRIL 2024
| [2024] FWCA 1572 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.225 - Application for termination of an enterprise agreement after its nominal expiry date
Alice Joy Renfrey
(AG2024/286)
IPCA (QLD) ENTERPRISE AGREEMENT 2012
| Fast food industry | |
| COMMISSIONER DURHAM | BRISBANE, 30 APRIL 2024 |
Application for termination of the IPCA (QLD) Enterprise Agreement 2012
Alice Joy Renfrey (the Applicant) has filed an application pursuant to s.225 of the Fair Work Act 2009 (the Act) to terminate the IPCA (QLD) Enterprise Agreement 2012 (the Agreement) after its nominal expiry date. The Applicant files this application as an employee covered by the Agreement.
The Agreement is a single enterprise agreement, and its nominal expiry date was 23 April 2016. There were no unions covered by the Agreement.
Section 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 Terminating an enterprise agreement after its nominal expiry date
(1) 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 the continued operation of the agreement would be unfair for the employees covered by the agreement; or
(b) the FWC is satisfied that the agreement does not, and is not likely to, cover any employees; or
(c) all of the following apply:
(i) the FWC is satisfied that the continued operation of the enterprise agreement would pose a significant threat to the viability of a business carried on by the employer, or employers, covered by the agreement;
(ii) the FWC is satisfied that the termination of the enterprise agreement would be likely to reduce the potential of terminations of employment covered by subsection (2) for the employees covered by the agreement;
(iii) if the agreement contains terms providing entitlements relating to the termination of employees’ employment—each employer covered by the agreement has given the FWC a guarantee of termination entitlements in relation to the termination of the agreement.
(1A) However, the FWC must terminate the enterprise agreement under subsection (1) only if the FWC is satisfied that it is appropriate in all the circumstances to do so.
(2) This subsection covers a termination of the employment of an employee:
(a) at the employer’s initiative because the employer no longer requires the job done by the employee to be done by anyone, except where this is due to the ordinary and customary turnover of labour; or
(b) because of the insolvency or bankruptcy of the employer.
(3) In deciding whether to terminate the agreement, the FWC must consider the views of the following covered by the agreement:
(a) the employees (unless there are no employees covered by the agreement);
(b) each employer;
(c) each employee organisation (if any).
Note: The President may be required to direct a Full Bench to perform a function or exercise a power in relation to the matter if any of the employers, employees, or employee organisations, covered by the agreement oppose the termination (see subsection 615A(3)).
(4) In deciding whether to terminate the agreement (the existing agreement), the FWC must have regard to:
(a) whether the application was made at or after the notification time for a proposed enterprise agreement that will cover the same, or substantially the same, group of employees as the existing agreement; and
(b) whether bargaining for the proposed enterprise agreement is occurring; and
(c) whether the termination of the existing agreement would adversely affect the bargaining position of the employees that will be covered by the proposed enterprise agreement.
(5) In deciding whether to terminate the agreement, the FWC may also have regard to any other relevant matter.
The Form F24C declaration, signed by the Applicant, in support of the application to terminate the Agreement included information indicating that:
Ms Renfrey is employed as a Sandwich Artist at the Subway Stockland store in Townsville and is covered by the Agreement;
Schedule A of the Agreement allows employers to pay casual employees less than the Fast Food Industry Award 2020 (the Award) with no penalties and no public holiday allowance. Consequently, the continued operation of the Agreement is unfair to her and others covered by it; and
She is not aware of any process underway for the making of a new enterprise agreement to replace the Agreement.
Directions were initially issued on 14 February 2024, however it became apparent that a number of the employers/franchisees covered by the Agreement had changed since its approval in 2012. My Chambers made enquiries with the confirmed employers/franchisees regarding how best to contact all relevant employers/franchisees. On 1 March 2024, my Chambers were provided the contact details of the franchisor, Subway Systems Australia Pty Ltd (the franchisor), who were contacted on the same day and agreed to provide the contact details of all those covered by the Agreement. This information was provided on 19 April 2024. The complete list of employers/franchisees are as follows (excluding those who advised that the Award covers their employees and not the Agreement; or that their store has closed):
Allmarr Pty Ltd
DE Systems Pty Ltd
CBO Payroll Services Pty Ltd
Ravtha Pty Ltd ATF Kgari
Kiro Siez Pty Ltd
Chrada Investments Pty Ltd
The Trustee for LAL-MAYE FAMILY TRUST
Melkyl Enterprises Pty Ltd
Sapsan Pty Ltd/Novosub Pty Ltd
Wanfil Pty Ltd as trustee for The Madestrong Family Trust
VBH Pty Ltd as trustee for The VBH Family Trust/V & K Business Holdings Pty Ltd
New Directions were issued to all employers/franchisees on 22 March 2024, requiring them to serve a copy of the F24B Application, the F24C Statutory Declaration and my issued Directions on all Employees. The Directions also provided that if any employee wished to be heard on the matter, they were to provide any views in relation to the Application by 8 April 2024.
I note that all employers were to confirm their compliance regarding the service of the F24B and F24C by 26 March 2024, however some employers complied late or did not confirm whether they complied with the direction. As such, I issued final directions on 8 April 2024 for the employers who did not confirm their compliance by affording them, and importantly their employees, an opportunity to provide their views by 22 April 2024, noting if no responses or views were received by the date specified, that I would proceed to determine the application based on the views already received.
Views of Employees
My Chambers received a total of eight submissions, from employees across a variety of stores, seven of which support the termination of the Agreement. The majority of employee views, apart from one, supported the termination of the Agreement on the basis of the low rates of pay and lack of penalty rates, noting the disparagement with other workplaces in the same industry and citing the difficulty of their wages keeping up with the cost of living. Several employees stated:
“I COMPLETELY agree with this termination we are getting underpaid and we need overtime, penalty rates and public holidays. We are getting robbed while customers think we are getting paid extra from the surcharge on public holidays. It is very wrong and I firmly believe back pay should be provided if applicable. Everyone deserves the appropriate compensation.”
And
“I approve of the application for termination of the act 2009 fair work agreement…My team and myself get severely underpaid for our work and effort for subway, we work on weekends and don’t get paid weekends rates like other fast food workers. We work public holidays with surcharges yet we don’t get paid holidays rate. Subway is an amazing job experience but the pay is very poor and not fair for the amount of work we do for them”
And
“I approve and agree with the termination of the contract as I believe myself and my coworkers deserve to be payed (sic) penalty rates.
As fast food workers already on minimum wage, I believe penalty rates should be a requirement. With the amount of hours I work weekly, I believe I am not being paid to my full efforts. This increase in my pay would help me immensely, motivating me to work and I wouldn’t have to worry as much about the hours I need.”
And
“I'm a subway worker from one of the stores affected by the current vote on the termination of the EBA currently set in place. I 100% agree with the decision to terminate the current agreements in place as they severely disadvantage us in the workplace compared to other fast-food establishments that receive extra bonuses.
These are just a few examples of extra benefits people can be applied inside of an EBA, but the IPCA Enterprise Agreement 2013 (sic) does not provide us with any of these included benefits.
Considering the cost-of-living crisis, and an increase again in how much things cost. It is fair that we should be entitled to the benefit of at least Penalty Rates, especially for our industry, our effort and our pay.
So, in conclusion I believe this EBA should be terminated, and a new one should be agreed upon that favours all parties that are working under the IPCA Enterprise Agreement 2013 (sic).”
The one employee who did not state they support the application, expressed their appreciation of rotating weekends and flexibility to accommodate for time off, and was content to concede penalty rates as they worked in a positive workplace culture with fair working conditions. It is unclear whether this employee opposes the termination of the Agreement, however, I note that if the Agreement were to be terminated, there should not be any adverse impact on workplace culture nor working conditions.
Views of Employers
Five responses were received from employers. None of the responses received opposed the termination of the agreement however the majority of employer submissions sought that the termination of the agreement be delayed from between three to six months to afford them time to:
transition to the Award,
introduce new systems,
implement payroll software, or
engage in bargaining to apply for a new agreement,
Whilst not opposing the termination of the agreement, one employer stated the following:
“I am writing to express my deep concerns regarding the potential termination of the IPCA 2012 Enterprise agreement currently in place in my Subway store. As the owner of a small business, I believe that such a termination would have detrimental effects on my operations and ultimately lead to severe consequences for both my employees and the business itself.
One of the primary reasons why the termination of the agreement would be detrimental is the current state of the economy. With the rising costs of everything, my profit margins have been significantly impacted, and I am currently struggling to break even. Introducing additional wages and penalties rates would only exacerbate this issue, pushing my business into a loss-making situation.
Moreover, my business heavily relies on employing a significant number of dedicated and hardworking staff members. I have always made it a priority to offer as many hours as possible to all of my employees, accommodating their availability and ensuring fair working conditions. However, if the agreement is terminated, and penalties rates are imposed, I would be forced to reduce my workforce by half in order to sustain the business. This would not only result in 20 people losing their jobs but also severely impact the overall sales of my business, as I would be unable to adequately roster staff to cope with customer demand.
In an effort to offer my employees some form of penalty rate, I have recently implemented time and a half rates for public holidays, taking advantage of the opportunity to charge a surcharge to customers that Subway has only recently allowed. While this has helped to offset the increased wage costs to some extent, it still does not offset the cost completely. While I would dearly love to offer my employees higher rates of pay and penalty rates, in the current climate I am just trying to break even and avoid bankruptcy.
Over the past 13 years of owning a Subway store, I have faced numerous challenges, including a mining downturn in our small community. Despite running at a loss during that period, I managed to recover. However, just as things were starting to stabilize, the COVID-19 pandemic hit, further impacting the business. Additionally, I have had to deal with the unfortunate actions of trusted managers and employees who have either stolen from me or neglected to follow proper processes, which has negatively impacted my business. The cost of living has also skyrocketed, and even price increases on the products we sell have not been enough to offset the rising costs of delivery, products, wages, rent, and insurance. It seems that as a business owner I can’t get a single good run. It’s just been blow after blow.
In light of these circumstances, I kindly request that you carefully consider the implications of terminating the Enterprise agreement. The consequences would not only be devastating for my business, but also for the livelihoods of my employees. I am committed to finding a solution that benefits both my employees and the sustainability of the business.
Additionally, if you do decide to terminate the enterprise agreement, I kindly request a four-month extension on the termination date. This extension would provide me with sufficient time to prepare for the transition to the award and make the necessary adjustments to ensure a smooth and fair transition for both my employees and the business.”
The Agreement
The Agreement contains a minimum wage rate schedule that consists of five different wage options for employees to be engaged under, after conducting an analysis between the Agreement and the Award, I have found that regardless of the wage rate option an employee is engaged under, all the rates in the Agreement appear to fall below the Award.
While the Agreement provides some provisions which are similar to the Award, the agreement does provide the following less beneficial terms:
Part time employees can work up to 38 hours per week instead of less than 38 hours per week as per the Award.
The Agreement is Silent on part time safeguards such as having reasonably predictable hours of work; agreement in writing of regular pattern of work upon engagement which includes the number of ordinary hours worked each day; the days of the week to be worked; and the actual start and finish times for each day and when meal breaks are taken and their duration. The Agreement is also silent on the requirement that a variation to part time hours must be agreed in writing.
Less beneficial casual loading of 20%
Silent on penalty rates for ordinary hours worked between 10:00pm and midnight and between midnight and 6:00am, Monday to Friday.
Pay Schedule - Option A is silent on all weekend and public holiday penalties.
Pay Schedule – Option B and D provide less beneficial penalties for casual employees and less beneficial Sunday penalties for permanent employees engaged at level 2 or 3.
Pay Schedule – Option C and E provide less beneficial Sunday penalties for casual employees engaged at level 2 or 3.
The Agreement is either silent or provides less beneficial Public Holiday Penalties when compared to the Award.
The Agreement provides that employees will be rostered to work on not more than 7 consecutive days, whereas the Award provides that a full time or part time employee is entitled to overtime when working in excess of 5 days in one week (or 6 days in one week if, in the following week, ordinary hours are worked on not more than 4 days).
The Agreement is silent on part time employees being paid when working in excess of their agreed hours or their regular pattern of work as provided for in the Award.
Silent on annual leave loading.
While the Agreement provides for reimbursement for all reasonable travel, accommodation and like expenses occurred when authorised, the Agreement is silent on all allowances provided for in the Award.
The following provides a comparison between the Agreement and the Award entitlements:
| Entitlement | IPCA (Qld) Enterprise Agreement 2011 | Fast Food Industry Award 2010 |
| Hours | Clause 7.1 Average of 38 hours per week averaged over a 4 week period. Clause 15 Max 11 hours per shift Rostered to work on not more than 7 consecutive dates. Min 3 hours per shift (or less by agreement). Clause 17 – Breaks Over 5 hours or more but less than 7.5 hours – 1 x 10 minute paid rest break and 1 x 30 minute unpaid meal break. 7.5 hours and over - 2 x 10 minute unpaid meal breaks and 1 x 30 minute unpaid meal break. | Clause 13 Max 11 hours per shift Clause 14 – Breaks 5 hours or more but less than 9 hours – 1 x 10 minute paid rest break AND 1 x unpaid meal break of at least 30 minutes but not more than 60 minutes. 9 hours or more: · If 2 x unpaid meal breaks are provided: 1 x paid rest break and 2 x unpaid meal breaks of at least 30 minutes but not more than 60 minutes. · If 2 x unpaid meal breaks are not provided: 2 x 10 minute paid rest breaks and 1 x unpaid meal break of at least 30 minutes but not more than 60 minutes. |
| Part-Time employees | Clause 7.2 Works up to 38 hours per week, averaged over 4 weeks. Clause 15.3 – Min 3 hours. Clause 3.7 – defines ‘letter of engagement’ which sets out classification, rostered hours (if known) and rate of pay. | Clause 10 Works less than 38 hours per week; and has reasonably predictable hours of work. Agreement in writing on a regular pattern of work (hours per day/ days of the week/ start and finish times). Any agreement to vary the regular pattern of work must be recorded in writing. Min 3 consecutive hours. |
| Casual Employees | Clause 7.3 & Schedule 2 Paid a flat casual rate which appears to be base rate plus 20%. Clause 15.3 – Min 3 hours. | Clause 11 125% - min 3 hours |
| Apprentices/Trainees | Schedule 2 - Trainees Rates of pay dependent on minimum wage rate schedule option. | Clause 15.4 Trainees |
| Penalty Rates | Silent | Clause 21 Ordinary hours worked between 10pm-midnight (Monday to Friday): 110% (135% casuals) Ordinary hours worked between midnight and 6am (Monday to Friday): 115% (140% casuals) |
| Weekend Penalties | Schedule 2 Option A – Silent Option B - Sat / Sun: 125% (140% for casuals) Option C - Sat / Sun: 150% (170% for casuals) Option D - Sat / Sun: 125% (140% for casuals) Option E - Sat / Sun: 150% (170% for casuals) | Clause 21 Full-time and part-time employees Casual employees |
| Public holiday Penalties | Schedule 2 Option A – Silent Option B - PH: 125% (140% for casuals) Option C - PH: 150% (170% for casuals) Option D - PH: 200% (220% for casuals) Option E – PH: 150% (170% for casuals) | Clause 21 Full-time and part-time employees Casual employees |
| Overtime | Clause 18 Hours worked in excess of 38 hours per week or outside the rostering provisions prescribed in clause 15. Mon – Sat: 150% (first 2 hours) 200% (thereafter) Sun: 200% TOIL accrued as per the penalty rate. i.e. 1.5 hours accrued for each hour worked when penalty rate is 150% etc. Clause 15 Rostered to work on not more than 7 consecutive dates. | Clause 20 Full time employees: Overtime payable for: · work in excess of: o 38 ordinary hours per week or an average of 38 ordinary hours per week averaged over a 4 week period; o 5 days in one week (or 6 days in one week if, in the following week, ordinary hours are worked on not more than 4 days); or o 11 ordinary hours on any one day; or · Before the employees rostered start time · After the employees rostered finish time · Outside the ordinary hours of work Part time employees: Overtime payable for: · work in excess of: o 38 ordinary hours per week or an average of 38 ordinary hours per week averaged over a 4 week period; or o 5 days in one week (or 6 days in one week if, in the following week, ordinary hours are worked on not more than 4 days); or o 11 ordinary hours on any one day; or o The employees agreed hours or agreed hours as varied o The employees regular pattern of work in circumstances where there is no written record of an agreed variation to a particular rostered shift · Before the employees rostered start time · After the employees rostered finish time · Outside the ordinary hours of work Causal employees: overtime is payable for work in excess of: · 38 hours per week (or in excess of 38 ordinary hours per week averaged over the course of the roster cycle); or · 11 ordinary hours on any one day Mon-Sat: 150% first 2 hours, 200% thereafter (causals – 175% first two hours, 225% thereafter) TOIL |
| Annual Leave Loading | Silent | Clause 22.2 17.5% or weekend rates (whichever is greater). |
| Allowances | Clause 28 – Expenses Employees shall be reimbursed for all reasonable travel, accommodation and like expenses occurred when authorised. Otherwise, agreement is silent. | Clause 17 Broken Hill Cold chambers; below 0 Celsius Meal (more than one hour’s overtime without 24 hours’ notice) |
While the Agreement does provide slightly more beneficial weekend penalties in limited situations, given the rates of pay are the same as the Award and noting all of the above provisions that are less beneficial, employees cannot be considered better off overall under this agreement when compared to the Award.
Consideration
Having satisfied myself that employees are not better off overall under the agreement, I consider the continued operation of the Agreement would be unfair for the employees covered by it. I am therefore satisfied that the Agreement must be terminated provided I am satisfied that termination is appropriate in all the circumstances.
Noting that some employers have been aware of this application since on or about 19 February, with all being made aware by 19 March 2024, and that as Subway franchisees, they will have access to assistance from the franchisor to implement any necessary changes, I do not consider the implementation of new payroll systems or software changes to be a valid concern.
I note the submission of some employers regarding the financial impact of terminating the Agreement and acknowledge there will be a cost impact on employers, however this consideration does not displace the requirement that I terminate the Agreement, if satisfied that its continued operation would be unfair to the employees covered by it.
Having considered the submissions of the parties, I am satisfied that it is appropriate in all the circumstances to terminate the Agreement.
Conclusion
Based on the declaration of the Applicant and views provided, I am satisfied that the continued operation of the agreement would be unfair for the employees covered it, and that the requirement of s.226(1)(a) is therefore met.
I am satisfied that it is appropriate in all the circumstances to terminate the Agreement, and I do so.
The termination will take effect at 11:59pm on 28 May 2024.
I Order accordingly.
COMMISSIONER
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