Applications by the Association of Professional Engineers, Scientists and Managers, Australia

[2023] FWCFB 137

[2023] FWCFB 137 [Note: Copies of the agreements to which this decision relates (AG834469, AG816152 and AC324214) are available on our website.]

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

Applications by the Association of Professional Engineers, Scientists and Managers, Australia

(AG2023/802, AG2023/805, AG2023/852)

Applications by Australian Municipal, Administrative, Clerical and Services Union

(AG2023/806, AG2023/807)

Application by Tan

(AG2023/742)

Application by Chen

(AG2023/761)

Application by Huang

(AG2023/810)

Application by Uszynski

(AG2023/863)

Application by Frick

(AG2023/871)

ONE HPA CERTIFIED AGREEMENT 2004-2007
[AG834469]

EDS PEOPLE AGREEMENT 2002
[AG816152]

ALCATEL-LUCENT EMPLOYMENT PARTNERSHIP AGREEMENT 2009
[AC324214]

Business equipment industry; scientific services

JUSTICE HATCHER, PRESIDENT

DEPUTY PRESIDENT EASTON

DEPUTY PRESIDENT WRIGHT

SYDNEY, 8 AUGUST 2023

Applications to extend the default period for the One HPA Certified Agreement 2004-2007, the EDS People Agreement 2002 and the Alcatel-Lucent Employment Partnership Agreement 2009.

Introduction

1. The Association of Professional Engineers, Scientists and Managers Australia (APESMA) has applied under item 20A(4) of Sch 3 to the Fair Work (Transitional Provisions and Consequential Amendments) Act2009 (Cth) (Transitional Act) to extend the default period for the One HPA Certified Agreement 2004-2007 (One HPA Agreement), the EDS People Agreement 2002 (EDS Agreement) and the Alcatel-Lucent Employment Partnership Agreement 2009 (Alcatel Agreement) (together the Agreements) for a period of four years.

1. Additional applications to extend the One HPA Agreement have been made by the Australian Municipal, Clerical and Administrative Services Union (ASU), and by Christopher Uszynski, Jinn Boon Tan and Zheng Chen, who are employees of DXC Enterprise Pty Ltd (DXC Enterprise). Additional applications to extend the EDS Agreement have been made by the ASU, and by Peter Frick, who is also an employee of DXC Enterprise.

1. The applications to extend the Agreements (the applications) were made between 22 and 29 March 2023.

1. The Agreements are collective agreement-based transitional instruments within the meaning of item 2(5)(c) of Sch 3 to the Transitional Act which continue to apply to employees of DXC Enterprise because of item 3 of Sch 3. DXC Enterprise was not an original employer party to any of the Agreements, but became bound by them as a result of various transmissions of business.

1. The Transitional Act was amended by the Fair Work Legislation Amendment (Secure Jobs, Better Pay)Act 2022 (Cth) to provide for the automatic termination of all remaining transitional instruments. Pursuant to subitems 20A(1) and (2) of Sch 3 to the Transitional Act, the Agreements will terminate on 6 December 2023 unless they are extended on one or more occasions under subitems 20A(6) or (11)(e). The main features of item 20A of Sch 3 to the Transitional Act are described in detail in the Full Bench decision in Suncoast Scaffold Pty Ltd [1] and we rely upon what is said in that decision.

1. The applications are made under subitem (4) of item 20A of Sch 3 to the Transitional Act. Under subitem (6), the Commission is required to extend the default period for an agreement upon application to do so 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.

1. Subitem (7) applies to an application which is made at or after the notification time for a proposed enterprise agreement. Subitem (8) applies to an individual agreement-based transitional instrument. The applicants do not contend that subitem (7) or subitem (8) apply to the applications.

1. The applicants rely on subitem (9) which applies if the application relates to a collective agreement‑based transitional instrument and if:

(b)it is likely that,as at the time the application is made, the award covered employees for the instrument under subitem (10), viewed as a group, would be better off overall if the instrument applied to the employees than if the relevant modern award or awards referred to in that subitem applied to the employees.

1. Under subitem (10) of item 20A, ‘award covered employees’ for a collective agreement-based transitional instrument are those employees covered by the instrument who, at the time an extension application is made under subitem (4), are covered by a modern award in operation in relation to the work to be performed under the instrument, with their employer also being covered by the instrument and the modern award. It is not in dispute that DXC Enterprise and employees covered by the One HPA Agreement and the EDS Agreement are covered by the Professional Employees Award 2020 (PE Award), the Business Equipment Award 2020 (BE Award) or the Banking, Finance and Insurance Award 2020 (BFI Award), and DXC and its employee covered by the Alcatel Agreement are covered by the PE Award.

Factual background

1. The relevant facts in this matter were not in dispute. The factual material before us consists of agreed statements of fact in respect of each of the Agreements, and witness statements made by Paul Inglis, Richard Thompson, Michael Driver, Jonathan Nelson and Quinton Holley, none of whom was required for cross-examination. There were also a number of contentions of fact contained in the parties’ submissions which were not the subject of any dispute. On the basis of this material, we make the following findings of fact.

1. DXC Enterprise is a business operating in the information technology industry. The Agreements apply to 540 employees of DXC Enterprise as a consequence of numerous transfers of business. There are currently 264 employees who are covered by the One HPA Agreement, 275 employees who are covered by the EDS Agreement and one employee who is covered by the Alcatel Agreement. These employees work in various roles including network engineering, support network infrastructure, IT help desk, system management, cyber security and database management.

1. Over the course of the week commencing 14 March 2023, DXC Enterprise advised employees covered by the Agreements about the sunsetting of the Agreements. Then, on or about 16 March 2023, DXC Enterprise offered these employees common law contracts which were open for acceptance until 3 April 2023.

1. Later in March 2023, DXC Enterprise held ballots of employees covered by the Agreements to ascertain whether they approved termination of the Agreements. The ballots were rejected by a majority of the affected employees on 3 April 2023. Evidence was provided by employees during the proceedings that they rejected the contracts offered by DXC Enterprise because they were regarded as less beneficial than the Agreements, and that they want the Agreements extended to ensure preservation of their current conditions for the longest period available. Similarly, Paul Inglis, State Director in South Australia/Northern Territory for the APESMA, gave evidence that the APESMA has 165 members employed by DXC Enterprise and that their primary concern was to maintain current conditions of employment.

1. The statements of agreed facts establish that:

·In relation to the One HPA Agreement, approximately 225 employees are covered by the PE Award, approximately 26 employees are covered by the BE Award, approximately eight employees are covered by the BFI Award and approximately seven employees are not covered by any award.

·In relation to the EDS Agreement, approximately 234 employees are covered by the PE Award, approximately 24 employees are covered by the BE Award, approximately 15 employees are covered by the BFI Award and approximately nine employees are not covered by an award.

·The single employee covered by the Alcatel Agreement is covered by the PE Award.

·In respect of each of the Agreements, it is likely that, as at the time the extension applications were made, the award-covered employees would be better off overall if the relevant Agreement applied to them than if the relevant modern award applied.

Submissions

1. The case for the applicants was primarily advanced by the APESMA. The APESMA submitted that, on the basis of the agreed statements of fact, it should be found that item 20A(9) applies in respect of each application. The APESMA submitted that, for the purpose of item 20A(6)(a), it was otherwise appropriate in the circumstances to grant the extensions given that:

(a)the continued operation of each of the Agreements over many years and the long service of the employees who remain covered by the instruments;

(b)the overall scheme of the legislation, which is now more disposed towards the maintenance of existing agreements;

(c)the evidence of the particular disadvantages for employees if the Agreements cease to operate, including the loss of substantial entitlements of long standing;

(d)the likely dislocation and/or disruption that will be occasioned if the Agreements cease to operate and employees revert to the awards;

(e)DXC Enterprise’s agreement that item 20A(9) is satisfied, and that each constituent group of employees covered by each respective award will be better off overall;

(f)the absence of any party or person opposing the applications, and the support of the ASU for the applications;

(g)the rejection of DXC Enterprise’s ballot to terminate the Agreements;

(h)the absence of any proposal by DXC Enterprise to engage in bargaining for a further enterprise agreement to cover the employees; and

(i)the absence of evidence of any threat to DXC Enterprise’s viability, or any economic difficulty at all.

1. DXC Enterprise accepted that item 20A(9) applied in respect of each application. However, in relation to the matters which the APESMA submitted made it appropriate in the circumstances to grant the extension, DXC Enterprise submitted that:

·(a) is an irrelevant consideration as there is no general disposition to the maintenance of zombie agreements;

·(b) and (c) are relevant to whether subitem (9) applies are otherwise irrelevant considerations;

·(d) is a neutral factor which does not make an extension either more or less appropriate;

·(e) is an irrelevant consideration as the legislation does not prefer an employer’s vote, preference or agreement over that of an employee or vice versa;

·(g) is an irrelevant consideration which confuses factors which might be relevant to the termination of an agreement with the question of whether it is appropriate to extend a zombie agreement.

1. The APESMA submitted that extensions in each case of four years would be reasonable in the circumstances. Whilst the Agreements continued on foot, DXC Enterprise would be at liberty to seek their termination and, given that capacity and the real detriment that would be suffered by employees if the Agreements ceased to operate, no shorter period was warranted.

1. DXC Enterprise further submitted that, as to the term of any extension, the APESMA proceeded on the basis that that a four-year extension should be treated as to the inevitable consequence of the satisfaction of the criteria in item 20A(6)(a) or (b) because DXC Enterprise is at liberty to seek the termination of the Agreements. It submitted any period of extension must be demonstrated to be appropriate or reasonable, that this had not been demonstrated for a four-year extension and no shorter period had been propounded by the APESMA.

Consideration

1. As noted above, the applications relate to collective agreement-based transitional instruments, which satisfies the requirements of subitem 9(a).

1. In relation to the better off overall criterion in subitem 9(b), the Full Bench in Suncoast Scaffold Pty Ltd said:[2]

[15] The requirement for the better off overall criterion in subitem 9(b) to be assessed by reference to the award covered employees ‘viewed as a group’ appears to allow for the possibility that the criterion may be satisfied, notwithstanding that some individual employees are not better off overall than under the relevant award, as long as there is a discernible advantage for the employees considered as a collective. Further, there only needs to be satisfaction as to the ‘likelihood’ of such a discernible collective advantage; that is, it only needs to be probable rather than certain. Taking these matters together, it is apparent that the better off overall criterion is less stringent that the BOOT in s 193 of the FW Act. However, beyond these broad observations, subitem 9(b) discloses no methodology as to how the criterion is to be applied. All that can be said is that a broad evaluative judgment is required based upon an overall comparison of the terms of the transitional instrument and the relevant award(s) in their application to the cohort of award covered employees.

1. Each of the statements of agreed facts annexes a detailed comparison between the relevant Agreement and each of the applicable awards. We do not propose to traverse these analyses in detail here. In broad terms, in relation to the One HPA Agreement, for all award-covered employees, the agreement’s provisions in relation to hours of work, paid parental leave and redundancy are more advantageous. The One HPA Agreement is less advantageous in respect of the annual leave loading and, in the case of employees covered by the BFI Award and PE Award, some allowances. A number of the other provisions of the One HPA Agreement, including those concerning overtime, call-out and call back are comparatively advantageous for some employees and disadvantageous for others covered by the BE Award and BFI Award.

1. In relation to the EDS Agreement, for all award-covered employees the EDS Agreement provisions in relation to hours of work, paid parental leave and redundancy are more advantageous. The agreement provisions which are less advantageous are leave loading and some allowances. For employees covered by the BFI Award, the EDS Agreement provisions in respect of overtime, call-out, call-back and shift loadings are better for some employees than those in the award, and worse for others.

1. The employee covered by the Alcatel Agreement has access to more beneficial redundancy provisions and payments for standby under the agreement compared to the PE Award.

1. For each of the employees covered by the One HPA Agreement, EDS Agreement and Alcatel Agreement, item 13 of Sch 9 to the Transitional Act operates to ensure that the base rates of pay for those employees are not less than those in the relevant award.

1. Having regard to the statements of agreed facts, the comparative analyses undertaken by the parties, that the majority of employees covered by each of the Agreements are covered by the PE Award, and that each of the Agreements contains several particularly beneficial provisions not contained in the relevant awards, we are satisfied that it is likely that,as at the time the applications were made, the award covered employees in each case, viewed as a group, would be better off overall if the One HPA Agreement, EDS Agreement and Alcatel Agreement applied to them than if the relevant modern awards applied.

1. Having determined that subitem (9) applies, we are now required to consider whether it is otherwise appropriate in the circumstances to extend the default periods for the Agreements. We approach this question on the basis of the propositions stated in Suncoast Scaffold Pty Ltd ,[3] namely that:

[16]…‘Appropriate’, on its ordinary meaning, connotes that it is ‘suitable’ or ‘fitting’ to grant the extension. ‘In the circumstances’ connotes the relevant matters and conditions accompanying the particular case. The inclusion of the adverb ‘otherwise’ indicates that appropriateness must be assessed by reference to circumstances other than those addressed by subitem (7), (8) or (9), as applicable. A broad evaluative judgment is required to be made.

(footnote omitted)

1. We consider that it is ‘otherwise appropriate in the circumstances’ to grant an extension for each of the Agreements for the following reasons. First, the conduct by DXC Enterprise in March 2023 in offering common law contracts on less favourable conditions to the employees covered by the Agreements indicates that DXC Enterprise may not maintain conditions provided by the Agreements beyond the default period if an extension is not granted, and may seek to reduce these conditions. In the absence of an express commitment by DXC Enterprise to maintain conditions provided by the Agreements (which has not been provided), employees will be likely to be worse off with respect to a number of long-standing conditions including hours of work and redundancy entitlements if the Agreements cease to operate.

1. Second, evidence from employees covered by the Agreements and the APESMA indicates that employees want the Agreements extended to ensure preservation of their current conditions. The outcome of the ballots conducted by DXC Enterprise in March supports this conclusion.

1. Third, while it is open to employees to seek to preserve conditions provided by the Agreements by making an enterprise agreement with DXC Enterprise under the Fair Work Act 2009 (Cth) (FW Act), there is no evidence that DXC Enterprise proposes to commence or engage in bargaining for such an agreement, making it highly unlikely that a replacement agreement would be in place by 6 December 2023.

1. Fourth, there is no evidence that extending the default period will cause DXC Enterprise any financial difficulty or affect the viability of DXC Enterprise’s business.

1. As we are satisfied of the requirements under item 20A(6)(a), we must extend the default period for each of the Agreements for a period of no more than four years. However, we have a discretion in relation to the length of the extension and we are not bound to grant the period of extension sought in the applications, which is the maximum period of four years.[4]

1. The default position of the statutory scheme is to automatically terminate transitional instruments on 6 December 2023, which in our view suggests a policy preference in the legislative scheme for employees covered by transitional instruments to eventually become regulated by instruments made under the FW Act. Although as noted above, there is no evidence that DXC Enterprise proposes to initiate bargaining for a replacement agreement, there are avenues available for employees covered by the Agreements, and the unions representing them, to secure the employees’ conditions in a new enterprise agreement, including by applying for a majority support determination under s 236 of the FW Act.

1. In these circumstances, we do not believe the default period for the Agreements should be extended by the maximum period in the absence of an identified plan or even intention on the part of the Applicants to seek to achieve a transition of the employees to an enterprise agreement made under the FW Act. This may result in the situation that employees are seeking to avoid simply being delayed by four years and may dissuade employees and their representatives from actively taking steps during the extension period to prevent a recurrence by bargaining for a new agreement as contemplated by the statutory scheme. We also take into account that, from DXC Enterprise’s perspective, the terms of the Agreements are of some antiquity and it did not even negotiate them, having become bound by the Agreements a considerable time after they were made by reason of transfers of business. In these circumstances, we do not consider it to be fair for DXC Enterprise to continue to be bound by the Agreements for longer than is reasonable to allow a transition to a new FW Act instrument.

1. In ISS Health Services Pty Ltd,[5] the Full Bench ordered an extension of the default period until 6 December 2024 for the Tempo Health Support Services Enterprise Agreement 2004. In that case, the application was made pursuant to item 26A, which applies to Division 2B State employment agreements and is in identical terms to item 20A of Sch 3 to the Transitional Act. The application was considered under item 26A(6)(a) on the basis that subitem (7) applies. Subitem (7) deals with an application made at or after the notification time for a proposed enterprise agreement to replace the transitional instrument. In that case, the employer had issued a notice of representational rights (NERR) on 8 June 2023 to all employees covered by the agreement. The Full Bench noted that the extension will allow a period of approximately 18 months from the notification time for the parties to reach an agreement and have it approved, and that in the event that the parties run into difficulties in bargaining, they may access the assistance of the Commission under s 240 of the FW Act. Further, the Full Bench said that, as a last resort, the parties could seek an intractable bargaining declaration, leading to arbitration by the Commission pursuant to s 235 of the FW Act.[6]

1. Given that DXC Enterprise is not currently proposing to commence bargaining for a replacement enterprise agreement, it may be necessary for the employees and the unions representing them to take a number of steps to facilitate this occurring, in addition to those taken by the parties ISS Health Services Pty Ltd. As noted above, these steps may include applying for a majority support determination under s 236 of the FW Act. Allowing for a reasonable amount of time for this to occur, we believe that in all of the circumstances, a period of approximately three years from the date of this decision is appropriate for the parties to take the necessary steps to secure the employees’ conditions in a new enterprise agreement.

1. The default period for the Agreements is therefore extended to 1 August 2026. Orders to give effect to this decision will be published separately. The Agreements are published, in accordance with item 20A(10A)(c), as an annexure to this decision.

PRESIDENT

Appearances:

L Doust, of counsel, for the Association of Professional Engineers, Scientists and Managers Australia.
J Fernon SC for DXC Enterprise Australia.
P Frick, applicant, on his own behalf.

Hearing details:

2023.

Sydney:
11 July.

[1] [2023] FWCFB 105. 

[2] Ibid at [15].

[3] Ibid at [16].

[4] Ibid at [18].

[5] [2023] FWCFB 122

[6] Ibid at [7].

Printed by authority of the Commonwealth Government Printer

<AG816152 AG834469 AC324214 PR764994>