ANNE ELIZABETH O'DONNELL
[2024] FWCFB 228
•22 APRIL 2024
| [2024] FWCFB 228 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
Sch. 3, Item 20A(4) - Application to extend default period for agreement-based transitional instruments
ANNE ELIZABETH O’DONNELL
(AG2023/4970)
| DEPUTY PRESIDENT WRIGHT | SYDNEY, 22 APRIL 2024 |
Application to extend the default period for an Australian Workplace Agreement
Introduction
Ms Anne O’Donnell has lodged an application to extend the default period for an individual agreement-based transitional instrument pursuant to subitem (4) of item 20A of Sch 3 to the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Transitional Act). The relevant instrument is an Australian Workplace Agreement (AWA) made under the Workplace Relations Act 1996 (WR Act) in 2003. The original parties to the AWA are Ms O’Donnell and her employer at that time, Commonwealth Bank of Australia (CBA).
There was a transfer of business from CBA to CMLA Services Pty Ltd (CMLA) on 26 March 2021 and Ms O’Donnell’s employment transferred to CMLA on that day. The AWA was a transferrable instrument and applied to Ms O’Donnell’s employment after the transfer date. Pursuant to subitem 20A(1) of Sch 3 of the Transitional Act, the AWA was to terminate on 6 December 2023 unless application was made to extend it under subitem 20A(4). Ms O’Donnell seeks to have the default period extended to 6 December 2027.
The main aspects of the statutory framework applicable to applications under subitem 20A(4) were detailed in the Full Bench decision in Suncoast Scaffolding Pty Ltd[1]. In short, the AWA is an agreement-based transitional instrument preserved in operation after the repeal of the WR Act and the commencement of the Fair Work Act 2009 (FW Act) by items 2 and 3 of Sch 3 to the Transitional Act. The Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (SJBP Amendment Act) amended the Transitional Act to provide for, amongst other things, the automatic termination of all remaining transitional instruments. It did this by adding item 20A to Sch 3 of the Transitional Act. The SJBP Amendment Act refers to transitional instruments as ‘zombie’ agreements. Item 20A provides for the automatic sunsetting of remaining agreement-based transitional instruments at the end of a ‘default period’. The default period is the period ending on 6 December 2023 unless extended by the Commission.
Under subitem (6) of item 20A, upon application, the Commission is required to extend the default period for an agreement-based transitional instrument for a period of no more than four years if the Commission is satisfied that (a), subitem (7), (8) or (9) applies and it is otherwise appropriate in the circumstances to do so; or (b), it is reasonable in the circumstances to do so.
The application is advanced under subitem 6(b) on the basis that it is reasonable in the circumstances to do so. Ms O’Donnell is concerned that she will be worse off under arrangements proposed by CMLA should the AWA terminate and so wishes the AWA to continue.
Background
At the time that Ms O’Donnell’s employment transferred to CMLA, the AWA also transferred, and became binding upon CMLA as a "transferrable instrument" under the FW Act. In addition, the Commonwealth Bank of Australia Group Enterprise Agreement 2016 (‘Enterprise Agreement’) also transferred by operation of the same rules. The Enterprise Agreement covered the applicant but did not apply at the time of transfer.
On 24 May 2023, Ms O’Donnell was notified about the upcoming changes to her terms and conditions of employment. In a letter to Ms O’Donnell, CMLA stated that from 7 December 2023 onwards, the Enterprise Agreement would apply to her employment with CMLA.
On 5 December 2023, Ms O’Donnell was provided with an individual arrangement, which sought to vary certain terms in the Enterprise Agreement. The arrangement is a proposed individual flexibility arrangement. Ms O’Donnell does not agree to the terms of the proposed individual flexibility agreement. She otherwise has no concern about the Enterprise Agreement regulating her employment.
The Enterprise Agreement permits individual arrangements to be entered into by agreement. Sections 202 – 204 of the FW Act provides safeguards for employees around individual arrangements. An enterprise agreement must include a flexibility term identifying the terms that may be so varied. Only terms identified in the enterprise agreement can be varied. The safeguards allow individual employees to only agree to arrangements varying the effect of an enterprise agreement in order to meet the genuine needs of employees and employer. The safeguards also include that the arrangement be in writing, it must be genuinely agreed to by the employee and employer, the arrangement must result in the employee being better off overall under the arrangement than if there had been no arrangement. A copy of the arrangement must also be provided to the employee. The arrangement must provide that the employee may terminate the arrangement it writing by no more than 28 days’ notice.
Consideration
Ms O’Donnell applies to extend the default period for the AWA under Item 20A(6)(b) on the basis that it is reasonable in all of the circumstances to do so. In Suncoast Scaffolding Pty Ltd the Full Bench described the ‘reasonable’ criterion in applications to extend default periods as follows[2]:
[17] Subitem (6)(b) of item 20A constitutes an independent pathway to the grant of an extension. The ‘reasonable’ criterion in the subitem should, in our view, be applied in accordance with the ordinary meaning of the word –that is, ‘agreeable to reason or sound judgment’. Reasonableness must be assessed by reference to the ‘circumstances’ of the case, that is, the relevant matters and conditions accompanying the case. Again, a broad evaluative judgment is required to be made.
Full Benches of the Commission have said a number of times that the purpose of the sunsetting arrangements introduced in the SJBP Act[3] is that zombie agreements are to be replaced by contemporary instruments made under the FW Act.
The Full Bench in Northern Inland Credit Union Limited[4] noted that the statutory intention behind the SJBP amendments is that transitional instruments approved many years ago under legislation sunset be replaced by modern industrial instruments made under the FW Act. The Full Bench also observed that this intention is particularly relevant to AWAs which are a species of individual employment agreements that are referred to in the objects of the FW Act as being inconsistent with a fair workplace relations system. The Enterprise Agreement was made under the FW Act. The AWA was made over 20 years ago under the WR Act. We consider those matters relevant to our broad evaluative judgment as to whether that the individual agreements continue to apply.
We find that it is not reasonable in the circumstances to extend the default period of Ms O’Donnell’s AWA. Once the AWA terminates her employment will be regulated by the Enterprise Agreement. While Ms O’Donnell has some misgivings about CMLA’S proposal to enter into an individual flexibility arrangement varying the effect of some of the terms of the Enterprise Agreement, the FW Act is quite clear that any such arrangements should ensure Ms O’Donnell is not disadvantaged. Further if Ms O’Donnell does not want to enter into the proposed arrangement she cannot be forced to do so as she must genuinely agree.
As our decision is to refuse to extend the default period and our decision is made after the sunset date in the Transitional Act, subitem 20A(11)(e) of Schedule 3 provides that we must extend the default period to the day of this decision or specify a day that is not more than 14 days after the day of this decision. We have decided that to enable the parties to make the necessary administrative arrangements to give effect to the sunsetting of the AWA and the default period is extended until 6 May 2024.
DEPUTY PRESIDENT
[1] [2023] FWCFB 105 at [3] to [18]
[2] id at [17]
[3] See for example Quinn Transport Pty Ltd Enterprise Agreement 2009 [2023] FWCFB 195at [23] and One HPA Certified
Agreement 2004-2007 [2023] FWCFB 137, at [32].
[4] [2023] FWCFB 120 at [23]-[25].
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