Autopact Victoria Pty Ltd
[2024] FWCA 963
•18 MARCH 2024
| [2024] FWCA 963 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.225—Enterprise agreement
Autopact Victoria Pty Ltd
(AG2023/4589)
Bayford Group Pty Ltd Enterprise Agreement 2015
| Vehicle industry | |
| DEPUTY PRESIDENT CLANCY | MELBOURNE, 18 MARCH 2024 |
Application for termination of the Bayford Group Pty Ltd Enterprise Agreement 2015.
An application was filed by Autopact Victoria Pty Ltd (the Applicant) seeking the termination of the Bayford Group Pty Ltd Enterprise Agreement 2015[1](the Agreement) pursuant to s.225 of the Fair Work Act 2009 (the Act). At the time of filing, it was said that there were 19 employees covered by the Agreement. It may also be noted that there are no employee organisations covered by the Agreement and the Agreement has passed its nominal expiry date of 12 February 2020.
I issued Directions for the further conduct of the application. Having noted that the employer covered by the Agreement is Bayford Group Pty Ltd (Company), I firstly required confirmation that the Applicant is the “Employer” entity covered by the Agreement. In response, the Applicant provided material that satisfied me this was the case. An ASIC Extract was produced for Autopact Victoria Pty Ltd (ACN 618 771 574) listing its ultimate holding company as Autopact Pty Ltd (ACN 608 040 606). Relatedly, a Financial Statement for Autopact Pty Ltd for 30 June 2018 was also provided. It outlined that Autopact Pty Ltd and the entities it controlled had acquired the business of the Bayford Group operating in Victoria on 31 July 2017 (the acquisition).
Secondly, the Applicant was also required to provide a copy of the Form F24B – Application Form (Form F24B) and the Form F24C Statutory Declaration made by Carly Black on 27 November 2023 (Form F24C) to each of the employees covered by the Agreement and the directions outlined that this was to be effected both via email communication and by placing a copy of both documents on a noticeboard used for communications with staff at each workplace. In response, the Applicant provided proof of service of the Form F24B and Form F24C via email on at least 19 employees purportedly covered by the Agreement, along with photos of these documents pinned on the noticeboards at workplaces located at Bundoora, Camberwell, Campbellfield, Epping and Fairfield.
Thirdly, the Applicant was invited to file with the Commission and serve on each of the employees covered by the Agreement any material upon which it relied, including material which addresses s.226 of the Act. On 20 December 2023, the Applicant provided further material, which included:
a)A document outlining an Executive Summary, the Applicant’s objective in seeking to have the Agreement terminated, an overview of the process and a conclusion.
b)Copies of communications sent to employees.
c)Attendance records from toolbox meetings conducted at each of the workplaces addressing the termination of the Agreement and confirmation from relevant managers that they had completed the subsequent 1:1 consultations with affected employees.
Fourthly, interested employees were given the opportunity to file material in reply.
Consideration
Prior to approving the termination of an Agreement, the Commission must be satisfied the requirements in s.225 and s.226 of the Act are met. The Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 amended s.226 of the Act, with the amendments taking effect from 7 December 2022.
Section 225 of the Act
An employer covered by the Agreement may apply to the Commission under s.225(a) of the Act for its termination if it has passed its nominal expiry date. As has been noted above, the Agreement nominally expired on 12 February 2020 and I am satisfied that as a result of the acquisition, s.313 of the Act operates and the Agreement applies to the Applicant and the transferring employees. These factors persuade me that the Applicant has standing to bring the Application under s.225(a) of the Act.
Section 226 of the Act
Section 226 of the Act provides:
“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.”
Following the recent amendments to s.226 of the Act, the reference to the public interest test formerly in s.226(a) has been removed. Notwithstanding the absence of a reference to the public interest, the Commission is required to consider whether the continued operation of the Agreement would be unfair to the employees covered (s.226(1)(a)) and any other relevant matters (s.226(5)). Ultimately, s.226 (1A) of the Act provides that the Commission must terminate the Agreement “only if it is satisfied that it is appropriate in all the circumstances to do so”.
The Full Bench in Aurizon Operations Limited; Aurizon Network Pty Ltd; Australian Eastern Railroad Pty Ltd[2] (Aurizon) considered the question of whether the termination of an agreement is appropriate. While the Full Bench in Aurizon outlined the approach to be taken to assess the appropriateness of terminating agreements prior to the commencement of the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022, I consider the approach in Aurizon is also applicable to applications to terminate agreements made since the commencement of the recently amended s.226 of the Act:
“All of the circumstances also need to be taken into account in considering whether termination of the agreements is appropriate. In particular the views of employers and employees covered by the agreement, their circumstances, and the impact of termination need to be taken into account. The requirement in s. 226(b) to take into account all of the circumstances including those set out in s. 226(b)(i) and (ii) is a requirement to take the matters into account and to give them due weight in assessing whether it is appropriate to terminate an enterprise agreement. In assessing appropriateness by taking into account all of the circumstances, we approached the task by reference to the construction of s. 226 and the contextual matters that bear upon that construction dealt with earlier as well as giving specific consideration to the matters identified in s. 226(b)(i) and (ii).”[3] (reference omitted)
Section 226(3)
Turning firstly to s.226(3)(a) and the views of the employees, there is no direct evidence from any employee covered by the Agreement outlining their views. I have noted that the employees were to be provided with copies of the Form F24B, Form F24C and there have been various photographs of employee noticeboards displaying these documents filed by the Applicant, together with emails to employees that persuade me this occurred. Additionally, the Directions also required the Applicant’s material to be served on the employees by email.
As to the Applicant’s engagement with the employees, the following is outlined in the Applicant’s material:
a)Toolbox meetings were held with all employees engaged under the Agreement from the week commencing 16 October 2023 to inform them of the decision to pursue the termination of the Agreement and the process to be undertaken. The discussion at the toolbox meetings covered:
(i)The reasons why the Applicant had decided to terminate the Agreement, including that a review had determined the working conditions outlined in the Agreement were not beneficial to the employees because they simply outlined the same working conditions as the National Employment Standards (NES) and the Vehicle Repair, Services and Retail Award 2020 (Award) and did not provide flexibility to either the Applicant or the employees.
(ii)The change for employees, in that they would no longer be employed under the Agreement and would transition to the Award.
(iii)The assertion that the employees would not be disadvantaged, advice that individual consultations would be scheduled and further, that after such a discussion, employees would have a ‘reasonable period of time’ to consider the change and come back with any questions.
(iv)The extending of an invitation for employees to raise any questions or concerns.
b)A copy of the first communication sent to all employees on 26 October 2023, which confirmed the application had been made, outlined what this meant for employees and confirmed that individual consultations would take place, during which employees could raise any questions regarding the application.
c)A copy of a second communication sent to employees on 30 October 2023, which outlined that rates had been increased such that they were now higher than those outlined in the Agreement and confirming the intention to schedule individual consultations.
d)One on one consultations were carried out with all employees from 31 October 2023 until 3 November 2023, at which the employees had the opportunity to raise any questions or concerns and were provided with “a BOOT” informing them that their current entitlements would not be changing.
e)Employees were provided with additional time to consider the proposal and raise further questions or concerns.
The Applicant has asserted that no concerns were raised during this process. It has submitted records for the Toolbox meetings that occurred and email communications that suggest the individual discussions occurred, with no employees raising questions in relation to the application or opposing it.
Having regard to the aforementioned material, I consider it is open to me to proceed on the basis that the employees do not oppose the application to terminate the Agreement.
As regards s.226(3)(b) and s.226(3)(c), the Applicant clearly supports termination of the Agreement and there are no employee organisations covered by the Agreement.
Section 226(1)(a)
Section 226(1)(a) provides that the Commission must terminate the Agreement if it is satisfied that the continuing operation of the Agreement would be unfair for the employees covered by it. As outlined above, there is an absence of direct evidence from any employee covered by the Agreement. For its part, the Applicant outlined that upon reviewing the Agreement, it determined that the working conditions outlined in the Agreement were not a “benefit” to the employees. The Applicant argued that the Agreement merely outlines the same working conditions as the NES and the Award, and specifically asserted that the Agreement imposes restrictions on employees working more than 4 hours on Saturdays when such work is available. As to this particular assertion, it may be noted that it would prevent employees working any reasonable additional hours beyond 4 on a Saturday, where such hours would attract a double time rate of pay. I am satisfied the Agreement could, in some circumstances, operate in a matter that restricts the application of s.62 of the Act and the earning capacity of employees.
Further, I note that Schedule 1 of the Agreement provides that the minimum rates of pay prescribed in the Award were applicable once they became higher than Agreement rates of pay and that the Applicant has disclosed that the salary bands for its employees who are not covered by the Agreement are higher than the Award wage rates. This suggests that the Applicant’s employees engaged under the terms of the Award receive higher rates of pay than those provided for under the Agreement. Having regard to this and the overtime restriction on Saturdays, I consider the continued operation of the Agreement would be unfair for employees covered by the Agreement.
Section 226(1A) and s.226(5)
Section 226(1A) provides that the Commission must terminate the Agreement under subsection (1)(a) only if it is satisfied that it is appropriate in all the circumstances to do so and s.226 (5) outlines that in deciding whether to terminate an agreement, the Commission may also have regard to any other relevant matter.
Beyond the wage rates and overtime restrictions, there would not appear to any differences of significance between the Agreement and the Award that would cause me to conclude that it is not appropriate to terminate the Agreement. Further, I note that the Applicant has 1600 employees employed across Victoria, Queensland and New South Wales and of these, only 19 (approximately 1%) are employed under the Agreement. I consider these factors weigh in favour of a conclusion that it is appropriate in all the circumstances to terminate the Agreement and make the obvious, supportive, observation that termination would simplify the Applicant’s payroll function. I have also noted the Applicant’s desire to have all employees contracted under the same industrial instrument, based on the belief that this will enhance the culture and working conditions of its dealerships.
Balance of s.226 and s.226A
As to s.226(1)(b) of the Act, the Agreement currently covers 19 employees and the material before the Commission does not suggest it is not likely to cover any employees. It is evident the Agreement continues to cover employees of the Company. Further, the material before the Commission satisfies me that none of the circumstances outlined in s.226(1)(c) apply.
Section 226(2) of the Act does not fall for consideration on the facts of this case and as there are no parties engaged in bargaining for a new enterprise agreement. Neither is s.226(4) a relevant factor. For completeness, I am satisfied that s.226A of the Act is irrelevant having regard to the circumstances of this case.
Conclusion
There is no expressed opposition to the termination of the Agreement and, for the reasons outlined above, I am satisfied that the continued operation of the Agreement would be unfair for the employees covered by the Agreement and that it is appropriate in all the circumstances to terminate the Agreement.
Pursuant to s.227 of the Act, the termination of the Agreement will take effect on and from 25 March 2024. An order to this effect will be issued with this decision.
DEPUTY PRESIDENT
[1] AE417802.
[2] [2015] FWCFB 540.
[3] Ibid at [167].
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