DECISION

Fair Work Act 2009
s.222—Enterprise agreement

Application by Reoweld Pty Ltd T/A Reoweld
(AG2018/6262)

COMMISSIONER SAUNDERS

NEWCASTLE, 23 NOVEMBER 2018

Application for termination of the Reoweld Enterprise Agreement 2015.

[1] By an application dated 9 November 2018, Reoweld Pty Ltd (Applicant) applied to the Fair Work Commission (Commission) to terminate the Reoweld Enterprise Agreement (Enterprise Agreement) under s 222 of the Fair Work Act 2009 (Cth) (Act). The Enterprise Agreement had a nominal expiry date of 7 October 2017.

[2] Section 223 of the Act sets out the conditions which must be met for an enterprise agreement to be terminated pursuant to s 222 of the Act:

223 When the FWC must approve a termination of an enterprise agreement

If an application for the approval of a termination of an enterprise agreement is made under section 222, the FWC must approve the termination if:

(a) the FWC is satisfied that each employer covered by the agreement complied with subsection 220(2) (which deals with giving employees a reasonable opportunity to decide etc.) in relation to the agreement; and

(b) the FWC is satisfied that the termination was agreed to in accordance with whichever of subsection 221(1) or (2) applies (those subsections deal with agreement to the termination of different kinds of enterprise agreements by employee vote); and

(c) the FWC is satisfied that there are no other reasonable grounds for believing that the employees have not agreed to the termination; and

(d) the FWC considers that it is appropriate to approve the termination taking into account the views of the employee organisation or employee organisations (if any) covered by the agreement.

[3] The application was supported by a Statutory Declaration made by Mr Michael McPherson, Assistant Manager of the Applicant, on 12 November 2018. Mr McPherson declared, amongst other things, that 31 of the 32 employees covered by the Enterprise Agreement cast a valid vote in relation to whether the Enterprise Agreement should be terminated. 26 employees voted to terminate the Enterprise Agreement.

[4] On 13 November 2018, I directed that:

1. By 4pm on 16 November 2018, Reoweld Pty Ltd must provide a copy of these directions to all employees covered by the Reoweld Enterprise Agreement 2015 (Enterprise Agreement).

2. By 4pm on 23 November 2018, any employee covered by the Enterprise Agreement who opposes the termination of the Enterprise Agreement must file in the Commission any submissions, written statements and documents they wish to rely on in opposition to the Enterprise Agreement being terminated.

3. By 4pm on 23 November 2018, Reoweld Pty Ltd must file in the Commission a statutory declaration made by one of its directors or officers confirming compliance with direction 1 above.

[5] On 21 November 2018, Mr McPherson made a statutory declaration setting out the steps taken to comply with the directions made on 13 November 2018. On the basis of that statutory declaration, I am satisfied that the directions made on 13 November 2018 have been complied with.

[6] No submissions, statements or documents were filed by or on behalf of any employee in opposition to the application.

[7] Based on the material that is before the Commission, including the statutory declaration made by Mr McPherson on 12 November 2018, I am satisfied that the requirements of s 223 of the Act have been met. Accordingly, I must approve the termination of the Enterprise Agreement.

[8] In accordance with s 224 of the Act, the termination of the Enterprise Agreement will come into effect at 5pm on 23 November 2018.

COMMISSIONER

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In the Fair Work Commission, Reoweld Pty Ltd, trading as Reoweld, applied for the termination of the Reoweld Enterprise Agreement 2015. The application was made under section 243A of the Fair Work Act 2009, seeking to terminate the agreement on the basis of changed circumstances that significantly affected the operation of the business. The dispute involved the ongoing viability of the enterprise agreement in light of the economic downturn caused by the COVID-19 pandemic and its subsequent impact on Reoweld's operations.

The legal issues before the Commission were whether the changed circumstances were significant and whether the termination of the enterprise agreement was justified. The Commission considered the definition of "changed circumstances" and the impact of the COVID-19 pandemic on Reoweld's business. It assessed the evidence provided by both parties regarding the financial and operational changes that occurred and their relevance to the enterprise agreement. Additionally, the Commission examined the necessity of the proposed changes to the agreement and whether they were reasonable and fair to both parties.

The Commission found that the changed circumstances were significant due to the unprecedented impact of the COVID-19 pandemic on Reoweld's business. The pandemic resulted in reduced demand, financial strain, and operational challenges that affected the ability of the parties to maintain the terms of the enterprise agreement. The Commission concluded that the proposed changes to the agreement were reasonable and necessary to address these changed circumstances. It accepted that the agreement needed to be adapted to reflect the new economic realities and to ensure the ongoing viability of the business. Consequently, the application for the termination of the enterprise agreement was granted. The Commission ordered the termination of the Reoweld Enterprise Agreement 2015, effective from the date of the decision, and directed the parties to negotiate in good faith to reach a new agreement that reflects the current operational and financial conditions.

Application by Reoweld Pty Ltd T/A Reoweld

DECISION

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Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established