Ballestrin Construction Services Pty Ltd
[2019] FWCA 2858
•30 APRIL 2019
| [2019] FWCA 2858 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
Section 222 - Application for approval of a termination of an enterprise agreement
Ballestrin Construction Services Pty Ltd
(AG2019/1012)
BALLESTRIN CONSTRUCTION SERVICES PTY LTD ENTERPRISE AGREEMENT 2014
Building, metal and civil construction industries | |
DEPUTY PRESIDENT ANDERSON | ADELAIDE, 30 APRIL 2019 |
Application for termination of the Ballestrin Construction Services Pty Ltd Enterprise Agreement 2014
[1] On 3 April 2019, Ballestrin Construction Services Pty Ltd (the applicant employer or Ballestrin)made an application to terminate the Ballestrin Construction Services Pty Ltd Enterprise Agreement 2014 (the Agreement) under section 222 of the Fair Work Act 2009 (the FW Act).
[2] Section 222 concerns applications for termination where termination has been agreed by employees.
[3] I issued directions on 10 April 2019.
[4] This matter was the subject of a hearing on 30 April 2019 at which time I heard from Ms Kamleh (with permission) of Fair Work Lawyers and Michael Hyde, General Manager of Ballestrin, on behalf of the applicant employer.
[5] Ballestrin is a wholly owned subsidiary in the McMahon Group of Companies. It provides concreting services in the building and construction industries. The applicant employer is entitled to apply for termination of the Agreement pursuant to section 222 of the FW Act.
[6] Sections 222 and 223 of the FW Act state:
“222 Application for FWC approval of a termination of an enterprise agreement
Application for approval
(1) If a termination of an enterprise agreement has been agreed to, a person covered by the agreement must apply to FWC for approval of the termination.
Material to accompany the application
(2) The application must be accompanied by any declarations that are required by the procedural rules to accompany the application.
When the application must be made
(3) The application must be made:
(a) within 14 days after the termination is agreed to; or
(b) if in all the circumstances FWC considers it fair to extend that period—within such further period as FWC allows.
223 When 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.”
[7] The Agreement is a single enterprise agreement. It was approved by the Fair Work Commission (the Commission) on 21 August 2014 1. It was approved to operate from 29 August 2014 with a nominal expiry date of 30 July 2018. It has now passed its nominal expiry date. It is an agreement directly with employees. No industrial organisation is covered by it.
[8] In the ordinary course of industrial relations, Ballestrin has negotiated a replacement agreement with its employees. On the day employees voted in favour of the replacement agreement, employees voted to terminate this current Agreement. This was an unsual course. The statutory scheme in the FW Act provides that an agreement can operate beyond its nominal expiry date, and, by force of law, will cease to operate at the time a replacement agreement is approved by the Commission (if so approved). Commonly, applications for termination of existing agreements are not made in circumstances where a replacement agreement is successfully negotiated.
[9] However, Ballestrin submit that a combination of two factors has led it and its employees to agree to terminate the Agreement and not await proceedings on the approval of the replacement agreement. These are:
1. That the Commonwealth authority responsible for the Code for Tendering and Performance of Building Work 2019 (the Code) had advised that one clause of the Agreement is non-complaint with the Code, thus putting Ballestrin and related companies in the McMahon Group at potential commercial disadvantage in not being able to tender for Commonwealth government funded work; and
2. The recent delays experienced by employers in the building and construction industry and industry generally in securing efficient and expeditious proceedings on applications for the approval of Agreements (under section 185 of the FW Act).
[10] Ballestrin submit that the potential commercial disadvantage from operating a non-Code complaint agreement and being unable to have proceedings on the replacement agreement promptly determined by the Commission act as factors weighing in favour of taking the unusual course of seeking the termination of the existing Agreement prior to proceedings being conducted on the replacement agreement.
[11] In accordance with my directions, employees covered by the Agreement were provided an opportunity to indicate whether any objection would be taken to the termination application or if they sought to be heard. No objection has been indicated and no employee has sought to be heard.
[12] I have considered the material provided in the application and by Mr Hyde and Ms Kamleh pursuant to section 223 of the FW Act. This includes the Statutory Declaration of Mr Hyde lodged with Commission on 3 April 2019 and the submissions of the applicant employer lodged by Ms Kamleh dated 18 April 2019. I note that the Statutory Declaration of Mr Hyde says as follows:
“1. Employees were advised of the Company's proposal to terminate the agreement at a meeting on 26 February 2019.
2. Employees received a written notice of ballot which included a written explanation of the terms and effect of the termination including preserved conditions. The explanation also provided information about employees' rights to seek external assistance if they chose.
3. This was done in conjunction with commencing to bargain for a new agreement (which was made over the same period).
4. Employees subsequently voted to terminate the existing agreement and make a new agreement, which is the subject of a separate application before the Commission.”
[13] I also note the submissions of the applicant employer of 18 April say as follows:
“3. For the reasons set out below, it is submitted:
a. The application to terminate the Existing Agreement is to ensure the Applicant is compliant with the Code for Tendering and Performance of Building Work 2019 (“the Code”).
b. The Applicant is not currently compliant with the Code and this has the potential to seriously comprise the entire corporate group that the Applicant is part of (McMahon Services).
c. Parallel to this process the Applicant made a Replacement Agreement. Although there is no reason why an employer could not terminate an agreement each time it makes a new one, in this case there is a commercial imperative to do so. There are presently delays being experienced in the pre-approval assessment process being undertaken by the Commission’s agreement assessment unit which can extend beyond six months, placing the Applicant and its group at further risk.
d. To ensure that employees are not disadvantaged The Applicant undertook to preserve certain employment conditions in respect of each employees’ employment.”
…
11. On 26 February 2019, the Applicant held and information session with employees about the proposed termination of the Existing Agreement. This provided an opportunity for employees to discuss the termination and ask any questions about its terms and effect.
12. The Employees covered by the Existing Agreement unanimously agreed to terminate the Agreement by way of secret ballot on 20 March 2019.”
[14] Attached to these submissions was a copy of correspondence from Mr Hyde provided to employees covered by the Agreement dated 26 February 2019, which stated:
“Ballestrin Construction Services Pty Ltd (Ballestrin) rely on work that includes work on projects that require Code compliance. The Code for the Tendering and Performance of Building Work 2016 (the Code) recently came into effect and the result of recent amendments is that we only have a limited window of time before we will be in breach of our obligations under the Code.
As a result, we are seeking to terminate the Ballestrin Construction Services Pty Ltd Enterprise Agreement 2014. The agreement passed its nominal expire date on 30 July 2018.
Although we are looking to terminate the agreement, Ballestrin undertakes to preserve the employment conditions set out in the below schedule in respect of your employment (as applicable), in some cases, we undertake to preserve part or your existing entitlement. In all other respects your employment will revert to being covered by the Building and Construction General On-Sire Award 2010.
We will hold an information session on 26th February 2019 in order to discuss the proposed new agreement these changes. We encourage you to attend in order to clarify any questions you may have.
If you would like a copy of the current agreement, or any document incorporated by reference, please contact me and I will arrange them for you.
If you have any queries about the proposed termination, please contact me to discuss. You are free to seek advice or assistance externally, including from an employee organisation if you wish. If you wish to appoint any party to assist you in the ballot process, please let us know.
Yours sincerely,
Michael Hyde”
[15] In proceedings before me on 30 April 2019, Ballestrin extended this undertaking to the preservation of the terms and conditions of employment in the Agreement listed in the schedule to any new employees who would have been employed under the Agreement but for its termination.
[16] I have considered the material provided in the application and by Ms Kamleh and Mr Hyde pursuant to section 222 of the FW Act. This includes the Statutory Declaration of Mr Hyde and submissions of the applicant employer.
[17] I am satisfied as to each of the matters contained in section 222 and 223 of the FW Act. It is appropriate to terminate the Agreement. In light of the undertakings given by the applicant employer to its employees and to the Commission concerning the preservation of certain wages and conditions of employment, no adverse consequences arise or are likely to arise to employees from such a course. Further, the balance of convenience weighs strongly in favour of not waiting until proceedings for the approval of the replacement agreement have been conducted before terminating the Agreement, given the vote of employees and the potential commercial consequences on the applicant employer and the McMahon Group of Companies should a non-Code complaint agreement continue in operation.
[18] Accordingly, it is appropriate to terminate the Agreement. I approve its termination.
[19] The termination will come into effect from 11.59pm on 30 April 2019. An Order to this effect will be issued.
DEPUTY PRESIDENT
Appearances:
J. Kamleh, with permission, and M. Hyde, for Ballestrin Construction Services Pty Ltd
Hearing details:
2019.
Adelaide; by Telephone.
30 April.
1 [2014] FWCA 5638
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