Application by Patrick Flynn
[2023] FWCFB 178
•11 OCTOBER 2023
| [2023] FWCFB 178 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.225 - Application for termination of an enterprise agreement after its nominal expiry date
Application by Patrick Flynn
(AG2023/2205)
| DEPUTY PRESIDENT BINET COMMISSIONER SCHNEIDER COMMISSIONER LIM | PERTH, 11 OCTOBER 2023 |
Application for termination of the Kinross Supa IGA Agreement 2014
On 3 July 2023, Mr Patrick Flynn (Mr Flynn) made an application (Application) with the Fair Work Commission (FWC) for the termination of the Kinross Supa IGA Agreement 2014 (Agreement) pursuant to s.225 of the Fair Work Act 2009 (Cth) (FW Act).
The Agreement was approved by the then Commissioner Bull pursuant to section 185 of the FW Act, on 21 May 2014 and commenced operation on 28 May 2014. The Agreement has a nominal expiry date of 28 May 2018.
The parties to the Agreement are Finesun Holdings Pty Ltd t/as Kinross Supa IGA (Finesun Holdings) and employees of Kinross Super IGA employed in classifications set out in clause 6 of the Agreement (Employees). At the time of making the Application Mr Flynn was employed by Finesun Holdings in the classification of Storeman.
There is no union which is a party to the Agreement. The Shop, Distributive and Allied Employees’ Association (SDA) represents Mr Flynn in this Application.
On 11 July 2023 Ms Carolyn Groeger, Head of People and Culture, wrote to the FWC on behalf of the employer Finesun Holdings, opposing the Application.
On 20 July 2023, the FWC received correspondence from an employee who was covered by the Agreement, also opposing the Application (Objecting Employee).
As the Application was opposed in accordance with section 266(2) of the FW Act on 31 July 2023 a Full Bench was constituted by the President of the FWC to determine the Application.
Directions were subsequently issued on 8 August 2023 for the filing of material in relation to this Application and an in-person hearing was listed for 4 October 2023.
Those Directions required Finesun Holdings to provide a copy of the materials filed by the parties in accordance with the Directions to each Employee and inform each Employee that if they wished to provide their views with respect to the Application they should notify the FWC by 4pm on Wednesday 4 October 2023.
On 17 August 2023, the SDA filed its materials in accordance with the Directions and on 31 August 2023 Finesun Holdings filed its materials in accordance with the Directions.
As at the date of this Decision the Objecting Employee is the only Employee who has provided any view about the Application to the FWC.
On 21 September 2023 Finesun Holdings informed the FWC that it no longer opposed the Application.
On 28 September 2023 the Objecting Employee informed the FWC that they are no longer employed by Finesun Holdings and that they no longer oppose the Application.
The hearing which was listed for 4 October 2023 was vacated and this Application has been determined on the papers.
Legislative provisions
Sections 225, 226 and 227 of the FW Act as amended by the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth) provide that:
“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.
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
Pursuant to s. 225(b) of the FW Act, an employee covered by an agreement may apply to the FWC for the termination of an agreement if it has passed its nominal expiry day. The Application was made by Mr Flynn in his capacity as an employee covered by the Agreement after the Agreement’s nominal expiry date of 28 May 2023.
On or around 20 June 2023, the Mr Flynn provided Finesun Holdings with his resignation notice. The Application was filed on 3 July 2023, and Mr Flynn worked his last shift for Finesun Holdings on 4 July 2023. Consequently, until the end of the shift on 4 July 2023, Mr Flynn’s employment conditions were determined by the Agreement and Mr Flynn was covered by the Agreement at the time the Application was made. We are therefore satisfied that Mr Flynn has standing to make the Application.
Pursuant to section 226(1)(a) of the FW Act, the FWC must terminate an enterprise agreement if it is satisfied that the continued operation of the agreement would be unfair for the employees covered by the agreement, and if it appropriate in all the circumstances to do so.
If the Agreement is terminated the modern award that would apply to the Employees is the General Retail Industry Award 2020 (Award). The Award sets out the minimum safeguards for employees in the retail industry.
Mr Flynn submits that it would be unfair for Employees to remain covered by the Agreement because the Agreement provides for terms and conditions which are inferior to those to which the Employees would be entitled under the Award. While Finesun Holdings do not agree with all of Mr Flynn’s submissions it does concede that the Agreement does contain provisions which are inferior to the Award.
In Kellogg Brown & Root Pty Ltd and Others and Esso Australia Pty Ltd[1] (endorsed in Australian Manufacturing Workers’ Union v Griffin Coal Mining Company Pty Ltd[2]), the Full Bench stated:
“[23] The notion of public interest refers to matters that might affect the public as a whole such as the achievement or otherwise of the various objects of the Act, employment levels, inflation, and the maintenance of proper industrial standards...”
Further, pursuant to section 3 of the FW Act, the objects of the Act include:
“ensuring a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions through the National Employment Standards, modern awards and national minimum wage orders”.
If the FWC is satisfied that the condition in section 226(1)(a) of the FW Act has been satisfied, s 266(1A) requires the FWC to also consider whether it is satisfied that it is appropriate in all the circumstances to terminate the Agreement. The matters identified as being relevant to the FWC’s consideration under section 226(1A) are:
a.the views of the employees covered by the Agreement and of the Employer (noting that the SDA representing Mr Flynn is not covered by the Agreement): section 266(3);
b.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 Agreement: section 226(4)(a);
c.c. whether bargaining for the proposed enterprise agreement is occurring: section 226(4)(b);
d.whether the termination of the Agreement would adversely affect the bargaining position of the employees that will be covered by the proposed enterprise agreement: section 226(4)(c); and
e.‘any other relevant matter’: section 226(5).
The phrase ‘any other relevant matters has previously been held to include such matters as the length of time since the nominal expiry date, the number of employees affected, the reduction or absence of reduction in terms and conditions of employment, and the presence or absence of proper industrial standards for employees.[3]
In relation to section 226(4) Mr Flynn says that the parties are not engaged in bargaining for a new enterprise agreement, and Finesun Holdings has not indicated any intention to start such a process.
The termination of the Agreement is not now opposed by the union with coverage of the Employees, Finesun Holdings or the Employees.
The Agreement is over five years past its nominal expiry date, and it was predicated on industrial conditions that existed nine years ago. The Agreement is unlikely to pass the better off overall test if it were to be filed for approval today. If the Agreement is terminated the terms and conditions of employment of the Employees would revert as a minimum to the Award. The Award sets out minimum existing industrial standards which are superior to conditions contained in the Agreement. The Agreement provides Finesun with a commercial advantage over its competitors at the cost of its employees who must comply with the Award.
There are no other relevant matters before us to take into account in deciding whether to terminate the Agreement.
Having regard to section 226(1A) of the FW Act, we are satisfied that it is appropriate in all the circumstances to terminate the Agreement. It follows that the Agreement must be terminated.
Finesun Holdings have requested that any termination of the Agreement occur no earlier than eight weeks from the date of any decision to terminate the Agreement to provide Finesun Holdings with sufficient time to amend its payroll system, inform the Employees and make any necessary roster changes. This request is not opposed by the SDA or Mr Flynn. We are satisfied that there are reasonable grounds for such a delay.
The termination will operate from eight weeks from the date of this decision. An order to this effect will be issued with this decision.[4]
DEPUTY PRESIDENT
[1] [PR951725].
[2] [2016] FWCFB 4620 at [44]
[3] Application by Wollongong Coal Limited t/a Wollongong Coal [2021] FWCFB 2161 (1 June 2021) at [13].
[4] PR767100.
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