“Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU)
[2024] FWCFB 164
•19 MARCH 2024
| [2024] FWCFB 164 |
| 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
“Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU)
(AG2023/4405)
COCHLEAR LIMITED ENTERPRISE PARTNERSHIP AGREEMENT 2005
| Health and welfare services | |
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COMMISSIONER CRAWFORD | SYDNEY, 19 MARCH 2024 |
Application to extend the default period for the Cochlear Limited Enterprise Partnership Agreement 2005
Introduction
The “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) has made an application under the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) (Transitional Act) to extend the default period for the Cochlear Limited Enterprise Partnership Agreement 2005 (Agreement). The application seeks to extend the default period for the Agreement to 6 December 2025.
Although the AMWU’s application correctly identified the name of the Agreement and that it was a “collective agreement”, the application also indicated it was an application made to extend the default period for a “Division 2B State employment agreement under Sch 3A of the Transitional Act.”
Cochlear Limited (Cochlear), the employer covered by the Agreement, opposes the application. It pointed out that there was an error in the characterisation of the Agreement in the application. The error was that the Agreement transitioned from the New South Wales industrial relations system to the federal system as a “preserved collective State agreement” when the “WorkChoices” amendments to the Workplace Relations Act 1996 were made and so it is an “agreement-based transitional instrument”, rather than a Division 2B State employment agreement. The AMWU accepted that was the correct characterisation for the Agreement.
Cochlear submitted that the consequence of the error is that the Commission has no jurisdiction to extend the default period for the Agreement and the application should be dismissed. Cochlear also submitted that allowing an amendment to correct the issue should not be permitted because this would “fundamentally change the particular type of application”[1] that was filed.
We disagree with Cochlear’s submission in this regard. The AMWU used the correct form for the application and identified the correct instrument. A copy of the Agreement was attached to the application. Given all this, Cochlear clearly knew exactly what instrument the AMWU’s application was directed at, as did the Commission. The suggestion that selecting one wrong box on the application form invalidated the application is rejected. So is the suggestion that we should not amend the application to indicate the correct item of the Transitional Act under which the application is brought. Such an approach would be inconsistent with the requirement in s.577 of the Fair Work Act 2009 (FW Act) for the Commission to perform its functions in a manner that is “fair and just” and “avoids unnecessary technicalities”. The Agreement currently covers more than 600 employees. We do not consider it is “fair and just” for the issue of what instrument should prescribe the minimum conditions of employment for employees to be resolved by dismissing the application because of an error of this kind.
We also reject the submission that the Full Bench decision in Iannou v Northern Belting Services Pty Ltd[2] is inconsistent with allowing the AMWU to amend its application so that the correct item of the Act is identified. The Full Bench there was considering whether the discretion to allow an amendment could be utilised to transform an unfair dismissal application into a general protections application. We consider the current circumstances to be quite different. There is an array of differences between the unfair dismissal and general protections regimes. In this case, it is clear from the application that the AMWU was seeking to extend the default period for the Agreement until 6 December 2025. The substance and purpose of the application is not changed by allowing the correct statutory provision to be identified. Further, the AMWU’s error is understandable given the complicated history of state and federal regulation for the Agreement. We consider the nature of the error weighs in favour of allowing the amendment.
Further, and contrary to Cochlear’s submission, allowing the amendment does not have the effect of creating a new application making the application out of time.[3] To the extent the application that was made does not comply with the Rules, we waive compliance with the Rules under Rule 6. We have decided to exercise our discretion under s.586 of the FW Act to allow the application to be amended to reflect that it is made pursuant to Sch 3 of the Transitional Act.
The Transitional Act was amended by the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth) (SJBP Act) to provide for the automatic termination of all remaining transitional instruments. Pursuant to items 20A(1) and (2) of Schedule 3 to the Transitional Act, the Agreement would have terminated on 6 December 2023 (the end of the default period) unless extended by the Commission. The main features of item 20A of Schedule 3 to the Transitional Act are described in detail in the Full Bench decision in Suncoast Scaffold Pty Ltd.[4]
Under Subitem 20A(6) of Sch 3, where an application is made under subitem 20A(4) for the default period to be extended, the Commission must extend the default period for a period of no more than four years if either (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. Subitem (7) applies if bargaining for a replacement agreement is occurring. Subitem (8) relates to individual agreement-based transitional instruments. Subitem (9) applies if the application relates to a collective agreement-based transitional agreements and it is likely that as at the time the application is made the award covered employees, viewed as a group, would be better off overall if the agreement continued to apply than if the relevant modern award applied.
Grounds relied upon
The AMWU’s application said that employees would be better off overall under the Agreement than they would be under the Manufacturing and Associated Industries and Occupations Award 2020 (Award), which covers the employees and will apply to the employees if the Agreement terminates, and that it is otherwise appropriate to extend the default period.
The AMWU also submitted that it is reasonable in the circumstances to extend the default period.
The AMWU indicated Cochlear has been resisting its attempts to commence bargaining for an enterprise agreement to replace the Agreement, requiring it to make an application for a majority support determination (Matter B2023/1340).
The AMWU submitted this behaviour is relevant to the discretionary assessment of whether it is “reasonable in the circumstances” to extend the default period.
The AMWU filed witness statements from Robyn Fortescue (Assistant Secretary of the NSW/ACT Branch) and Linda Everingham (Organiser) to substantiate its arguments concerning Cochlear’s approach.
The application therefore seeks an extension under either subitem 20A(6)(a) and (9) of Sch 3 in relation to the BOOT argument, or alternatively, because it is reasonable in the circumstances pursuant to subitem 20A(6)(b).
Opposition to the application
Cochlear opposes the AMWU’s application.
Cochlear submitted that the relevant employees would be better off overall under the Award and that subitem 20A(6)(a) and (9) were not satisfied.
Cochlear filed a witness statement from Lauren Schembri (Employment Relations Manager) in support of its position. Ms. Schembri said:
· Employees and the AMWU were notified of the impending termination of the Agreement via the sunsetting provisions on 29 May 2023.
· Cochlear employees are currently paid well in excess of the minimum rates in the Agreement and the Award.
· Cochlear has undertaken to maintain the Agreement conditions that are more beneficial than the Award including: quarterly bonus, cleanroom allowance, two 15-minute paid breaks, redundancy conditions and extra compassionate leave.
· Cochlear was attempting to lock these superior conditions in via amended employment contracts which had been signed by around 82% of the workers.
· Cochlear will honour the conditions for any current employees who have declined to sign the amended contracts and will offer them to new employees for equity reasons.
Cochlear submits it is not reasonable to extend the default period given employees will be better off under the Award and they will not lose the beneficial conditions in the Agreement.
Consideration
We are not satisfied we can extend the default period pursuant to subitem 20A(6)(a) and (9) of Sch 3 because we are of the view that the relevant employees, viewed as a group, would be better off under the Award than they would be under the Agreement.
The Agreement does contain several conditions that are superior to the Award, including in relation to:
· More generous redundancy provisions.
· A cleanroom allowance.
· Paid breaks.
· More generous compassionate leave.
· A quarterly bonus – albeit this is discretionary.
However, the Agreement contains a significant number of inferior conditions including:
Longer span of ordinary hours.
· Shorter minimum engagement periods.
· A lower casual loading.
· Less generous shiftwork conditions.
· Lower weekend penalties.
· Fewer Allowances.
The rates of pay in the Agreement are lower than those in the Award and hence are to be paid at no less than the Award base rates in accordance with Sch 9 of the Transitional Act.
We do not consider the superior conditions identified above are sufficient to outweigh the detrimental conditions in the Agreement.
After reviewing the terms of the Agreement and the Award, we have determined the relevant employees, viewed as a group, would not be better off under the Agreement than they would be if the Award applied. As a result, the default period for the Agreement cannot be extended under subitem 20A(6)(a) and (9) of Sch 3.
We cannot extend the default period under subitem 20A(6)(a) and (7) of Sch 3 because Cochlear has not commenced bargaining for an enterprise agreement.
We turn then to consider whether it is “reasonable in the circumstances” to extend the default period in accordance with subitem 20A(6)(b) of Sch 3.
In Suncoast Scaffold Pty Ltd,[5] the Full Bench described the ‘reasonable’ criterion in item 20A(6)(b) of Sch 3 to the Transitional Act in this way:
[17] Subitem (6)(b) of item 20A constitutes an independent pathway to the grant of an extension. The ‘reasonable’ criterion in the subitem should, in our view, be applied in accordance with the ordinary meaning of the word – that is, ‘agreeable to reason or sound judgment’. Reasonableness must be assessed by reference to the ‘circumstances’ of the case, that is, the relevant matters and conditions accompanying the case. Again, a broad evaluative judgment is required to be made.
We also consider the purpose of the provisions to be relevant to the broad evaluative judgment we are required to make. The explanatory memorandum expressed the purpose of the provisions relating to extending the default period in this way:[6]
Provision would be made for the FWC to (upon application) extend the default period to ensure the automatic sunsetting of zombie agreements does not operate harshly, including by leaving employees worse off.
Full Benches of the Commission have said a number of times that the purpose of the sunsetting arrangements introduced in the SJBP Act[7] is that zombie agreements are to be replaced by contemporary instruments made under the Fair Work Act 2009 (FWAct).
We are not satisfied that in the circumstances of this case it is reasonable to extend the default period for the Agreement. The Agreement does not contain contemporary terms and the employees covered by the Agreement would be better off overall under the Award.
We also note that Cochlear has confirmed it will maintain the superior conditions in the Agreement for all current and new employees. That means there is no practical detriment from the Agreement terminating. The AMWU has argued the amended contracts provide Cochlear with additional flexibility, in addition to protecting the superior conditions. We do not consider this justifies an extension of the default period given around 82% of the relevant employees have agreed to the amended contracts, and the remaining 18% will continue to receive the superior conditions even if they continue to decline to accept the amended contract.
Although the AMWU raised some concerns about the clarity of Cochlear’s position on the superior conditions, we do not consider there is any realistic prospect that Cochlear will reduce the conditions given it has confirmed in writing to the Commission that this will not occur, and that confirmation has been taken into account in refusing the AMWU’s application.
It is clear the AMWU is frustrated with Cochlear’s refusal to bargain. However, the AMWU has available to it the provisions of the bargaining provisions of the FW Act. We note that its application for a majority support determination was recently granted by Commissioner McKenna.[8] We are of the view that the use of the provisions of the FW Act are the appropriate vehicle to deal with Cochlear’s refusal to bargain for a replacement agreement. Given our view that the employees will be better off overall under the Award, Cochlear’s opposition to the AMWU’s desire to have a replacement agreement does not justify an extension of the default period.
As our decision is to refuse to extend the default period under subitem 20A(6) of Sch 3 and our decision is made after the sunset date in the Transitional Act, subitem 20A(11) provides that we must extend the default period to the day of this decision or specify a day that is not more than 14 days after the day of this decision. We have decided that to enable the parties to make the necessary administrative arrangements to give effect to the sunsetting of the Agreement the default period is extended to 2 April 2024.
The application is dismissed.
DEPUTY PRESIDENT
[1] Iannou v Northern Belting Services Pty Ltd (2014) 245 IR 279; [2014] FWCFB 6660 at [17].
[2] Ibid.
[3] David Djula v Centurion Transport Co. Pty Ltd [2015] FWCFB 2371 at [28]. See also Hedger v. Trustee for Perrott Trust t/a Perrott Engineering Pty Ltd [2023] FWCFB 231.
[4] [2023] FWCFB 105 at [3] to [18].
[5] [2023] FWCFB 105.
[6] Explanatory Memorandum Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 at [670].
[7] See for example Quinn Transport Pty Ltd Enterprise Agreement 2009 [2023] FWCFB 195 at [23] and One HPA Certified Agreement 2004-2007 [2023] FWCFB 137, at [32].
[8] [2024] FWC 526.
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