Application by Glen Mathew McBlane
[2023] FWCA 1033
•6 APRIL 2023
| [2023] FWCA 1033 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.225—Enterprise agreement
Application by Glen Mathew McBlane
(AG2022/5311)
Bluestar Security - Enterprise Agreement - 2014
[AE408918]
| Security services | |
| JUSTICE HATCHER, PRESIDENT | SYDNEY, 6 APRIL 2023 |
Application for termination of the Bluestar Security - Enterprise Agreement - 2014 – Fair Work Act 2009 (Cth) ss 225, 226 – application ultimately not opposed – agreement terminated.
Introduction and background
On 16 December 2022, Glen McBlane applied pursuant to s 225 of the Fair Work Act 2009 (Cth) (FW Act) for termination of the Bluestar Security - Enterprise Agreement - 2014[1] (Agreement) under s 226. The Agreement nominally expired on 15 July 2018, but has not been replaced. The employer covered by the Agreement is Knightwatch Security Pty Ltd t/a Bluestar Security (Bluestar).
The application was initially allocated to Deputy President Boyce. It was referred to me on 29 December 2022 because, on that date, Bluestar advised the Deputy President’s chambers that it opposed the application. Bluestar also informed the Deputy President that it raised a jurisdictional objection to the application, being that Mr McBlane was not an employee of Bluestar at the time he filed the application and thus did not have standing to apply under s 225. Section s 615A(3) of the FW Act requires the President of the Commission to direct a Full Bench to perform a function or exercise a power in relation to a matter arising under s 226 in relation to an application for the termination of an enterprise agreement if the application is opposed, relevantly, by the employer covered by the agreement. Thus, Bluestar’s stated opposition to the application indicated that it would be necessary to refer it for determination by a Full Bench in accordance with s 615A(3).
On 13 January 2023, I held a directions hearing in the matter. Mr McBlane was represented by the United Workers’ Union (UWU), although the UWU is not itself covered by the Agreement. At the directions hearing, Bluestar’s representative advised that it no longer pressed its jurisdictional objection. Following the directions hearing, I issued directions for Bluestar to file and serve submissions and evidence in response to the application, as well as to provide a copy of the application and Mr McBlane’s accompanying declaration to each employee covered by the Agreement and invite them to provide their views on the application to my chambers. I also directed Mr McBlane to file and serve submissions and evidence in reply.
On 2 February 2023, the UWU advised my chambers that following discussions, Bluestar no longer opposed the application and ‘the parties’ (Mr McBlane, the UWU and Bluestar) had reached a consent position that termination of the Agreement should take effect 12 weeks from the date of the termination decision, and that the application could be determined without a hearing. The parties also sought further directions to enable employees covered by the Agreement to provide their views on the application to my chambers on a confidential basis, that is, without their names and personal details being disclosed to Bluestar. I issued those directions on 3 February 2023.
Legislative provisions
Sections 225 and 226 of the FW Act provide:
225Application 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
(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.
Submissions and evidence
Bluestar
In its submissions responding to the application, Bluestar conceded that the terms of the Agreement may be no longer be compatible with those that appear within the Security Services Industry Award 2020 (Award). It submitted that in accordance with the outcome of its discussions with the UWU, the termination of the Agreement should take place 12 weeks from the date of the termination decision. This would allow it a transition period in which to discuss resultant changes with the administration staff at the university for which it provides security services and change its payroll system. Bluestar also filed a statutory declaration made by its Managing Director, Harry Davernaris, which confirmed that Bluestar had served its relevant employees with a copy of Mr McBlane’s application and his accompanying declaration.
Mr McBlane and UWU
Mr McBlane filed a witness statement setting out matters relevant to his application. He confirmed that he was employed by Bluestar at the time he lodged his application. His statement included a comparison of the wages he received in the period July-October 2022 to what he would have earned if paid in accordance with the Award. Mr McBlane’s evidence was that he would have received $6,741.60 more under the Award. Mr McBlane also deposed that he corresponded with Bluestar management from mid-November 2022 regarding his concerns about the pay and conditions under the Agreement and the lack of bargaining for a replacement agreement, and that he considered Bluestar’s response unsatisfactory.
The UWU filed a witness statement of Damien Davie, its National Coordinator in the Property Services portfolio, which role includes organising security officers across Australia. Mr Davie’s evidence was that the UWU supports termination of the Agreement because covered employees are better off overall under the Award, and because the flat, loaded rates of pay in the Agreement give Bluestar an ‘unfair commercial advantage’ over competitors.
While the UWU is not covered by the Agreement and therefore not a party to the application in its own right, it nonetheless filed joint submissions with Mr McBlane in support of terminating the Agreement. The UWU submitted that, as the employee organisation with coverage of the contracted security services industry, it has a sufficient interest in the matter for the Commission to take its views into account.
Mr McBlane and the UWU submitted that the continued operation of the Agreement would be unfair to the employees covered by it because:
·several of the Agreement’s terms are inferior to those under the Award;
·there is evidence that the eight-weekly audit that Bluestar undertook to conduct to reconcile employee entitlements with those under the Award had not in fact occurred (despite this being a condition of the Agreement being approved in the first place);
·the loaded rates of pay in the Agreement would likely not pass the better off overall test were it to be filed for approval today, in light of the Loaded Rates Agreements[2] decision; and
·Bluestar does not appear to intend to bargain for a new enterprise agreement to replace the Agreement and instead relies on the Agreement to maintain a commercial advantage that correspondingly disadvantages its own employees.
Mr McBlane and the UWU further submitted that termination of the Agreement would be appropriate in all the circumstances and that Mr McBlane’s views should be taken into account even though he is no longer a Bluestar employee. They finally submitted that the fact that Bluestar does not oppose termination of the Agreement weighs heavily in favour of the Commission doing so.
Other employees of Bluestar
An employee of Bluestar emailed my chambers on 2 March 2023 to advise that they supported the application to terminate the Agreement, but requested that their correspondence remain private. The employee submitted that the Agreement was ‘no longer in favour of the employees it governs’ and that they believed they and other employees covered by the Agreement would be better off under the Award. No other employee made any communication to my chambers in relation to the matter.
Consideration
As set out above, it has turned out that none of the persons identified in s 615A(3)(b) of the FW Act opposes the application. It is therefore not necessary for the matter to be referred to a Full Bench and, in the circumstances, the most convenient course is for me to determine the application.
I am satisfied that Mr McBlane was an employee covered by the Agreement at the time he lodged his application, and thus was competent to make the application under s 225 of the FW Act.
I am satisfied, for the purpose of s 226(1)(a) of the FW Act, that the continued operation of the Agreement would be unfair for the employees covered by it. The unfairness to employees is demonstrable in the following ways:
(1)The analysis contained in Mr McBlane’s statement, which was not contested by Bluestar, demonstrates that as a full-time employee he was significantly worse off under the Agreement than he would have been if he was paid in accordance with the Award. In order to obtain approval of the Agreement, Bluestar gave an undertaking to the effect that it would conduct an audit every eight weeks comparing pay under the Agreement to the pay that would have been required under the Award, and to make up any shortfall for any employee in the next pay cycle. Mr McBlane’s evidence, which was not contested, was that to his knowledge no such audit was conducted. While it might be, on one view, that this is a matter which goes to compliance with the Agreement (including its associated undertaking)[3] rather that the operation of the Agreement (including the undertaking) in accordance with its terms, even compliance with the undertaking would not leave employees better off overall when compared to the Award.
(2)An important element of the shortfall in pay in McBlane’s case was that, as a condition of his engagement, he was required to sign a pre-prepared Individual Flexibility Agreement (IFA) pursuant to clause 6.4.1 of the Agreement by which he nominated to work ‘voluntary additional hours’ (i.e. overtime) at the relevant ordinary-time rate in clause 3.2.1 of the Agreement, with the effect that he thereby waived his entitlement under clause 4.2.3 of the Agreement to overtime penalty rates of 150% for the first two hours and 200% thereafter. This IFA patently contravened s 203(4) of the FW Act and clause 6.4.2(c) of the Agreement, which require that an IFA results in the employee being better off overall than if the IFA had not been entered into. Clause 4.2.3 of the Agreement requires the payment of the prescribed penalty rates for overtime work irrespective of whether they are worked because of an employer direction or ‘voluntarily’, so it is not possible for an employee to be better off under the IFA by working ‘voluntary’ overtime for no additional penalty rate.[4] However, notwithstanding clause 6.4.2(c), the IFA appears to be authorised by clause 6.4.1(a) of the Agreement, which permits IFAs to vary the effect of terms of the Agreement dealing with, among other things, overtime rates and penalty rates. Hence, the IFA may be regarded as arising from the operation of the terms of the Agreement. It appears that a requirement to sign an IFA of this nature is part of Bluestar’s standard approach on engagement of employees.
(3)The casual rates of pay under the Agreement (as adjusted in accordance with clause 3.2.1(c)) for night span work, permanent night shifts, Saturday work, Sunday work and work on public holidays are significantly lower than under the Award. The rate for weekday hours within the span is higher under the Agreement, but if a casual employee is not allocated work during those hours, they will always be worse off under the Agreement than under the Award.[5]
(4)Bluestar accepts in its submissions that the Agreement ‘is no longer compatible with the terms and conditions which appear within the [Award]’ and that employees covered by the Agreement ‘in all probability may have less beneficial terms and conditions of employment than they would otherwise receive under the relevant modern award.’
I am further satisfied for the purpose of s 226(1A) of the FW Act that it is appropriate in all the circumstances that the Agreement be terminated. The termination of the Agreement is supported by the employer, the UWU and by the only employee who expressed a view about the application, nobody has expressed any opposition, and termination would result in employees of Bluestar receiving their minimum entitlements under the Award.
As a consequence of the above findings, ss 226(1) and (1A) of the FW Act require that the Agreement be terminated. The date of effect will be 12 weeks from the date of this decision, as agreed by Mr McBlane, Bluestar and the UWU. An order giving effect to this decision will be issued in conjunction with this decision.
PRESIDENT
Written submissions:
Mr Glen McBlane and United Workers’ Union: 10 March 2023.
Employer: 24 February 2023.
[1] AE408918.
[2] [2018] FWCFB 3610.
[3] Under s 191(1) of the FW Act, where an enterprise agreement covering a single employer is approved upon acceptance of an undertaking under s 190(3) in relation to the agreement, the undertaking is taken to be a term of the agreement.
[4] See United Workers’ Union v Hot Wok Food Makers Pty Ltd [2022] FWCFB 191, 320 IR 14 at [120].
[5] See Loaded Rates Agreements [2018] FWCFB 3610 at [121].
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