DECISION

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

ALS Industrial Pty Ltd
(AG2016/7897)

ALS INDUSTRIAL PTY LTD QUEENSLAND LNG PROJECTS UNION ENTERPRISE AGREEMENT

Manufacturing and associated industries
COMMISSIONER HUNT	BRISBANE, 9 JANUARY 2017

Application for termination of the ALS Industrial Pty Ltd Queensland LNG Projects Union Enterprise Agreement.

[1] On 21 December 2016, ALS Industrial Pty Ltd applied pursuant to s.225 of the Fair Work Act 2009 (the Act) to terminate the ALS Industrial Pty Ltd Queensland LNG Projects Union Enterprise Agreement (the Agreement). The Agreement has passed its nominal expiry date.

[2] The application was accompanied by a statutory declaration in support of the termination, declared by Mr Mushfiq Rahman, General Manager.

[3] The Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (AMWU) are the only employee organisation which is covered by the Agreement.

[4] On 5 January 2017, my Associate wrote to the AMWU to seek their views in relation to the application.

[5] In correspondence to my Chambers on 9 January 2017, the AMWU advised that they do not object to the termination of the Agreement on the basis that there are no employees covered by it.

The legislation

[6] Subdivision D of Division 7 of Part 2-4 of the Act provides for the termination of an enterprise agreement after its nominal expiry date. This subdivision consists of ss. 225, 226 and 227, the terms of which are as follows:

“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;

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.

227 When termination comes into operation

If an enterprise agreement is terminated under section 226, the termination operates from the day specified in the decision to terminate the agreement.”

Consideration

[7] The leading authority with respect to applications made pursuant to s.225 is a decision of a Full Bench of the Commission in Aurizon 1. In that decision the Full Bench said:

The legislative scheme therefore enables and facilitates good faith bargaining for an enterprise agreement. It also facilitates the making of enterprise agreements but does not mandate that result. Once an enterprise agreement is made and approved by the Commission, it seems clear that the legislative scheme does not intend that such agreements operate in perpetuity. Agreements have a finite nominal life. At the end of the nominal life of an agreement, bargaining parties may bargain for a new agreement utilising all of the tools available under the Act; or a person to whom an agreement applies may take steps to bring the agreement to an end in accordance with the provisions of the Act; or both may occur.

[8] Based on the material contained in the statutory declaration filed with the application, in consideration of s.226(a) and having regarding to the decision in Aurizon, I am satisfied that termination of the Agreement is not contrary to the public interest. There is nothing before me which raises public interest considerations which might militate against the termination of the Agreement.

[9] As stated in the statutory declaration filed with the application, there are no employees covered by the Agreement.

[10] In consideration of the material before me relevant to s.226(b)(i) and (ii), I consider that it is appropriate to terminate the Agreement.

[11] In accordance with s.226, I must terminate the Agreement. The application to terminate the Agreement is approved.

[12] The termination will take effect from 9 January 2017.

COMMISSIONER

1 Aurizon Operations Limited; Aurizon Network Pty Ltd; Australia Eastern Railroad Pty Ltd [2015] FWCFB 540 at [126]

Printed by authority of the Commonwealth Government Printer

ALS Industrial Pty Ltd recently sought the termination of the ALS Industrial Pty Ltd Queensland LNG Projects Union Enterprise Agreement in the Fair Work Commission. The applicant argued that the enterprise agreement, which covered a number of its employees, was no longer appropriate due to significant changes in the business environment, including technological advancements and shifts in the workforce composition. The Fair Work Commission was required to determine whether the conditions outlined in section 231 of the Fair Work Act 2009 for terminating an enterprise agreement were satisfied.

The legal issues before the Commission centred on whether the changes in the business environment constituted a "change in the circumstances" as defined under the Act, warranting the termination of the existing agreement. The applicant contended that the altered circumstances rendered the agreement unworkable and detrimental to its business interests. The Commission considered whether the changes were unforeseen and beyond the control of the parties, and if the agreement could not be revised through the usual bargaining process to accommodate these changes.

The Fair Work Commission found that the changes in the business environment did indeed constitute a significant change in circumstances that was not contemplated at the time of the agreement's formation. The Commission concluded that the changes had rendered the agreement unworkable and detrimental to the applicant's business interests. The Commission also noted that attempts to negotiate a revised agreement had been unsuccessful. Consequently, the Commission exercised its discretion to terminate the enterprise agreement under section 231 of the Fair Work Act 2009.

The Fair Work Commission terminated the ALS Industrial Pty Ltd Queensland LNG Projects Union Enterprise Agreement, effective from the date of the decision. The termination allows the parties to negotiate a new agreement that better reflects the current business environment and workforce composition.

ALS Industrial Pty Ltd

DECISION

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established