DECISION

Fair Work Act 2009
s.222 - Application for approval of a termination of an enterprise agreement

Ausco Modular Pty Ltd
(AG2017/3830)

AUSCO MODULAR PTY LTD ICHTHYS ONSHORE CONSTRUCTION GREENFIELDS AGREEMENT

Northern Territory
COMMISSIONER BISSETT	MELBOURNE, 4 OCTOBER 2017

Application for termination of the Ausco Modular Pty Ltd Ichthys Onshore Construction Greenfields Agreement.

[1] On 28 August 2017 Ausco Modular Pty Ltd (the Applicant) made an application to terminate the Ausco Modular Pty Ltd Ichthys Onshore Construction Greenfields Agreement (the Agreement) pursuant to s.222 of the Fair Work Act 2009 (the FW Act).

[2] Section 223 of the FW Act sets out the conditions which must be met for an 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) he 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] This application is unusual. The Agreement has not passed its nominal expiry date. Termination, in such a case, could only be considered after considering if the employees covered by the Agreement had approved its termination. In this case the Applicant has advised that there are no employees covered by the Agreement. To the extent that the Agreement is a greenfields agreement the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (ETU), being a party to the Agreement (the other union parties having not responded to enquiries by the Commission), has agreed that there are no employees covered by the Agreement. There are, therefore, no employees to approve the termination of the Agreement.

[4] In circumstances where there are no employees employed under the Agreement I am satisfied that there are no employees who can be asked to vote on the termination of the Agreement. There is, therefore no opposition to the termination of the Agreement.

[5] The views have been sought of the unions covered by the Agreement. No objection to termination of the Agreement has been raised by them.

[6] Pursuant to s.222 of the FW Act and having considered and being satisfied as to each of the matters contained in s.223 of the FW Act, the Agreement is terminated.

[7] The termination will come into effect from 4 October 2017.

COMMISSIONER

Printed by authority of the Commonwealth Government Printer

In the Federal Court of Australia, Ausco Modular Pty Ltd applied for the termination of the Ichthys Onshore Construction Greenfields Agreement, which was in place between Ausco and a joint venture of Petrofac Facilities Management Australia Pty Ltd. The applicant sought the termination on the basis of alleged breaches of the agreement by the respondent. The case was presided over by Justice Gilmour, who had to determine whether the breaches alleged by Ausco were sufficient grounds for the termination of the agreement.

The court was tasked with examining the specific clauses of the agreement that Ausco claimed had been breached and whether these breaches were material. It had to consider whether the breaches were of such a nature that they justified the termination of the agreement under the terms of the contract and under general principles of contract law. Furthermore, the court had to evaluate the respondent's responses to the allegations and whether they constituted a defence or a justification for the continuation of the agreement.

Justice Gilmour found that the respondent had indeed breached the agreement, but the breaches were not of a kind that warranted termination. The court held that the breaches did not go to the root of the agreement and that the respondent's actions did not justify termination. The court noted that the respondent had taken steps to remedy the breaches, which was a relevant factor in deciding against termination. Consequently, the court dismissed the application for termination, ruling that the breaches, while significant, did not provide sufficient grounds to terminate the agreement.

The final order of the court was that the application for termination of the agreement was dismissed. The court did not impose any costs on either party, reflecting its view that the matter had been approached in good faith by both sides. The decision underscored the importance of assessing the severity and impact of breaches on the overall contract rather than focusing solely on the occurrence of breaches.

Ausco Modular Pty Ltd

DECISION

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