Boskalis Australia Pty Ltd
[2018] FWCA 1841
•11 APRIL 2018
| [2018] FWCA 1841 |
| FAIR WORK COMMISSION |
| decision |
Fair Work Act 2009
s.225—Enterprise agreement
Boskalis Australia Pty Ltd
(AG2017/3636) (AG2017/3642)
Boskalis Australia Contract Propelled Dredging AIMPE Union Collective Agreement, 2012
Boskalis Australia Dredging (NON PROPELLED DREDGES, AIMPE) GREENFIELD Agreement 2012
| Dredging industry | |
| Deputy President Bull | SYDNEY, 11 APRIL 2018 |
Termination of enterprise agreements after their nominal expiry date, AIMPE opposed to terminations, public interest test, when the FWC must terminate an agreement.
On 18 August 2017, Boskalis Australia Pty Ltd (the applicant) made application to the Fair Work Commission (the Commission) pursuant to s.225 of the Fair Work Act 2009 (Cth) (the Act) to terminate two enterprise agreements (the Agreements):
Boskalis Australia Contract Propelled Dredging AIMPE Union Collective Agreement, 2012 (AG2012/7899) (Propelled Agreement)
Boskalis Australia Dredging (Non Propelled Dredges, AIMPE) Greenfield Agreement 2012 (AG2012/12753) (Non Propelled Agreement).
The Agreements are single enterprise agreements as per s.172(2) of the Act.
On the same day an application to terminate the Boskalis Australia Contract Propelled Dredging AMOU Union Collective Agreement 2011 (AMOU agreement) was made to the Commission, which is subject to a separate decision.[1]
The two applications have been dealt with together as the applicant provided the same reasons and evidence in support of both applications and the Australian Institute of Marine and Power Engineers (AIMPE) objected on the same basis to the termination of the Agreements.
The Propelled Agreement was approved by the Commission on 20 September 2012 and operated from 27 September 2012 with a nominal expiry date of 30 June 2016. The Propelled Agreement’s coverage is work in or in connection with dredging including travelling to or from a dumping area or whilst moving from port to port.[2] The Propelled Agreement reached its nominal expiry date some 21 months ago.
The Non Propelled Agreement was approved by the Commission on 19 December 2012 as a Greenfield Agreement. The Agreement commenced to operate from 26 December 2012 with a nominal expiry date of 30 June 2016. The Agreement covers employees engaged in the classifications set out in the Agreement who are eligible to be members of AIMPE in or in connection with dredging in Australia.[3] The details of the ‘genuine new enterprise the employer is establishing or is proposing to establish’ which is necessary for a greenfield agreement are not apparent from an examination of the terms of the Agreement.
Mr Petrus Boere, the applicant’s General Manager, filed a statutory declaration dated 18 August 2017, in support of the applications required by Rule 26 of the Fair Work Commission Rules 2013. Under the heading Public Interest, Mr Boere declared:
“Since January 2017 (August 2014 for Non Propelled Agreement[4]) the agreement has not had application to any employees. There are no employees currently engaged, and Boskalis Australia has no intention to engage new employees, or to bargain for a replacement agreement.”
No other submission was made and the applications did not address any other aspect of s.226 of the Act. On this basis and having regard to s.226(b), the Commission contacted AIMPE who are an employee organisation covered by the Agreements, seeking any comment they wished to make on the applications.
On 8 September 2017, Mr Martin Byrne, AIMPE Federal Secretary, provided two written responses (essentially the same) objecting to the applications. The submissions sought for the Agreements to remain in force and made reference to the recent history of dredging in Australia by the applicant, concluding that the employment of dredging experienced marine engineers is in the public interest as it facilitates the efficient start-up of new dredging projects and assists in on time completion of projects.
In the alternative, AIMPE requested that the Commission chair a conference of the parties to discuss any other outcome.
Both applications were listed for a conference before the Commission on 4 October 2017. No alternative outcome to the application to terminate both Agreements was reached during this process and directions were subsequently issued for any further submissions and witness statements to be filed.
Submissions and witness statements were filed by both parties. The submissions addressed both applications. In view of the differing submissions and witness statements of both parties the Commission provided an opportunity for any witness evidence to be subject to cross-examination. AIMPE sought to cross examine Mr Boere who had made two witness statements[5] and the applications were subsequently listed for a hearing to enable this to occur.
AIMPE Submissions
AIMPE provided a written submission on 8 September 2017, detailing their opposition to the termination of the Agreements. On 30 November 2017, further submissions were filed together with a witness statement of Mr Brendan Matthey, AIMPE National Organiser, dated 29 November 2017.
Mr Matthey deposed that in late 2016, AIMPE were willing to renegotiate agreements for each major dredging company, and had written to the applicant on 9 February 2017 in an attempt to commence negotiations. Around May 2017 he spoke to Australian engineers employed by the applicant who indicated they would not accept an agreement with lesser terms and conditions than the existing Agreements. Mr Byrne explained to the Commission in his oral submissions that such employees, while not covered by the Agreements, would have been engaged by the applicant on work outside Australia at the time.
Mr Matthey stated that during the process of discussing replacement agreements with the applicant, AIMPE was served with a copy of the termination application for the Propelled Agreement.[6]
AIMPE submits that the applicant’s “current approach” would have the effect of excluding Australian Engineering Officers by introducing a “profound distortion of the labour market” which is contrary to promoting social inclusion for all Australians.[7]
AIMPLE submit the termination of the Agreements would leave Engineers on the Dredging Industry Award 2010 (the Dredging Award) rate which is less than ratings who work under their supervision employed under an enterprise agreement. This is said to effectively discriminate against members of AIMPE or those eligible to be a member in favour of employees who are members of the Maritime Union of Australia (MUA) or eligible to be a member.
AIMPE also submit that the applications to terminate the Agreements is inconsistent with the right to freedom of association as it demonstrates that the applicant will punish employees eligible to be members of AIMPE while not taking the same action against employees eligible to be members of the MUA.
AIMPE puts a similar proposition in regard to employees eligible to be members of the Australian Workers’ Union (AWU) as the applicant has not made application to terminate the Boskalis Australia Contract Dredging (Non –Propelled Dredges AWU) Enterprise Agreement 2012 (AWU Agreement).
AIMPE submit that termination of the Agreements would be contrary to the public interest as in all the circumstances it would have the effect of excluding, or tending to exclude one group of Australian workers from future employment in dredging projects in Australia.
AIMPE contend that the Jan De Nul (Australia) Pty Ltd Enterprise Agreement 2016 (Jan De Nul 2016 Agreement) (which was opposed by AIMPE) which the applicant states reflects the current market rates and conditions, does not reflect market rates and conditions, and that no Australians are being employed under the Jan De Nul 2016 Agreement.
While AIMPE acknowledges that the applicant does not currently directly employ any dredging employees in Australia, it states that it is unknown what might happen in the future.[8] Further, AIMPE says that the applicant’s business model will not be able to be implemented due to changes to government policy on temporary work visas.[9]
Applicant’s submissions
The applicant filed submissions dated 1 November 2017, together with a witness statement of Mr Petrus Boere dated 31 October 2017.[10] The submissions were for all intents and purposes the same as those initially filed in the application to terminate the AMOU Agreement.[11]
On 8 December 2017, the applicant filed submissions in reply to those of AIMPE as well as a further witness statement of Mr Boere.
Mr Boere stated that the applicant’s dredging work in Australia has included the construction and maintenance of ports and waterways, land reclamation and coastal defence.
In respect of enterprise agreements, the applicant’s practice has been to enter into separate enterprise agreements with the three maritime unions.[12]
The applicant submits that it currently has no employees whose employment is covered by the Agreements. In respect of the Non Propelled Agreement it has not employed any person covered by the Agreement since August 2014 and in the case of the Propelled Agreement, January 2017.
The applicant says the Agreements in their current form render the applicant uncompetitive among other dredging companies and it is not financially viable to maintain the Agreements as their operation prejudices the applicant’s chances of securing future work. The applicant says the Agreements were made in “boom time conditions” which no longer exist. An example of this is that the applicant’s turnover in 2017 decreased to 1% of its turnover in 2012/13.[13]
Mr Boere attested to the applicant not having secured any future work to which the Agreements could apply. Mr Boere’s evidence was that the Agreements are “highly uncompetitive in the current market” and their continued existence was having a negative financial impact on the applicant.
At present the applicant has no active projects in Australia in which it employees any employees and it does not employ any Engineers. There are only a small number of dredging projects currently in Australia which the applicant would normally be engaged in. The applicant has been unsuccessful in tendering for any work, and submits that the rates and conditions of the Jan De Nul 2016 Agreement (a competitor) reflect the current market conditions in the dredging industry.
Mr Boere estimated that there was only 3 months to 18 weeks of work in the next one to two years for which the applicant expects to submit a tender.[14] In Mr Boere’s view, the best case scenario is that the applicant may win 4 to 6 weeks of work over the next two years depending on whether it can be competitive in the rates offered to clients.
In the immediate future the applicant is likely to use Engineers provided by other employers for any short term work it may win as this suits their current business structure.
The applicant submits that termination of the Agreements would not be contrary to the public interest as their termination will not have any detrimental impact on the achievement of the objects of the Act, employment levels, inflation or the maintenance of proper industrial standards as per the decision of the Full Bench in Re Kellogg Brown and Root, Bass Strait (Esso) Onshore/Offshore Facilities Certified Agreement 2000.[15]
To the extent that the public interest might require consideration of the impact on employees covered by the Agreements this is not a relevant consideration as there are no employees covered by the Agreements.[16]
It is put by the applicant that it:
“… has considered and explored bargaining for a new or replacement agreement, and has concluded that this is not an appropriate and/or preferred course of action, having regard to the Applicant’s business, including the Applicant’s best assessment of any potential future business.”[17]
Mr Boere’s evidence was that discussions with AIMPE regarding replacement agreements were not in line with the state of the market and the likely future business needs of the applicant. He confirmed that since his last witness statement (made in December 2017), nothing had changed in that the applicant had still not secured new work and did not employ any Engineers under the Agreements sought to be terminated.
The applicant submits that AIMPE has produced no evidence to substantiate its arguments that the applications are contrary to the objects of the Act, discriminate against certain persons and are contrary to freedom of association. The applicant submits that, on the whole, these arguments are more accurately characterised as an expression of AIMPE’s views on the operation of enterprise agreements and the Act and should not be accepted.
The applicant says that discussions with the MUA do not to constitute enterprise bargaining under the Act as the applicant has no employees and is not establishing a new enterprise for the purposes of a greenfield agreement under the Act.
The applicant does not employ anyone under the AWU Agreement and states that not currently pursuing a termination of that agreement does not constitute unfair treatment or discrimination. The applicant does not accept that the Agreement terminations will lead to Engineers being employed under the terms and conditions of the Dredging Award[18]
The applicant’s submissions centred on the Agreements no longer being reflective of current market rates and conditions as they had been negotiated during a prosperous period for the dredging sector which no longer exists. On this basis the applicant is unable to secure work currently or into the future for Engineers while the Agreements remain in force.
The applicant submits that termination of the Agreements does not prevent bargaining from taking place in the future. Mr Boere’s evidence was that if the Agreements were terminated Boskalis would use manning agents to provide Engineers and Officers paid at market rates.
Relevant Legislation
Section 225 of the Act states:
“225 Application for termination of an enterprise agreement after its nominal expiry date
If an enterprise agreement has passed its nominal expiry date, any of the following may apply to the FWC for the termination of the agreement:
(a) one or more of the employers covered by the agreement;
(b) an employee covered by the agreement;
(c) an employee organisation covered by the agreement.”
The applicant is an employer covered by the Agreements and thus has standing to make the termination applications. The Agreements have passed their nominal expiry date of 30 June 2016.
Section 226 of the Act sets out when the Commission must terminate an expired enterprise agreement where an application to terminate an agreement is made.
“226 When the FWC must terminate an enterprise agreement
“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 it is not contrary to the public interest to do so; and
(b) the FWC considers that it is appropriate to terminate the agreement taking into account all the circumstances including:
(i) the views of the employees, each employer, and each employee organisation (if any), covered by the agreement; and
(ii) the circumstances of those employees, employers and organisations including the likely effect that the termination will have on each of them.”
Determination under s.226
As stated by VP Watson in Energy Resources of Australia Ltd v Liquor, Hospitality and Miscellaneous Union[19], the formulation of s.226 directs the Commission to the nature of the considerations to be taken into account and the test to be applied to determine the matter.
In summary s.226 of the Act, requires the Commission to terminate an expired enterprise agreement if it is not contrary to the public interest and it considers it is appropriate to do so taking into account all the circumstances including consideration of the views of the employees, the employer, and any employee organisation covered by the Agreement (which in this case is AIMPE) and the circumstances of the employees, the employer and AIMPE including the likely effect that the termination will have on each of them.
Is termination of the Agreement contrary to the public interest?
The nature of the public interest test contained in s.226(a) is such that the test to be applied is that the Commission must be satisfied that termination of an enterprise agreement is not contrary to the public interest.
The Agreements have been in operation since September 2012 (Propelled) and December 2012 (Non Propelled) and both have passed their nominal expiry dates. The evidence of Mr Boere was that no employees have been engaged under the Non Propelled Agreement since August 2014 and, in the case of the Propelled Agreement, since January 2017.
The Full Bench in Kellogg Brown and Root Pty Ltd and others (Kellogg)[20] outlined the approach to be taken to the public interest test in the context of the termination of certified agreements under the Workplace Relations Act 1996 (Cth):
“[27] It should be emphasized that the Commission's consideration of the public interest for the purpose of s.170MH(3) is directed to the consequences of terminating the agreement. In a given case, some consequences will be clearly predictable, others will be less so. For the most part the Commission should be guided by the likely foreseeable consequences of termination rather than speculation about possible consequences.”
The approach to the public interest test outlined in Kellogg was adopted by the Full Bench of the Commission in the context of s.226 of the Act in Aurizon Operations Limited; Aurizon Network Pty Ltd; Australia Eastern Railroad Pty Ltd[21] (Aurizon).
In echoing the approach taken in Kellogg the Full Bench in Aurizon stated at paragraph [129]:
“Section 226(a) requires a consideration of whether termination of the agreements is not contrary to the public interest. It seems to us that a consideration of the public interest will involve something that is distinct from the interests of the persons and bodies covered by the agreements. This distinction seems to be reflected in the structure of s. 226. The question of how the public interest is to be assessed was considered by a Full Bench of the Australian Industrial Relations Commission in Re Kellogg Brown and Root, Bass Strait (Esso) Onshore/Offshore Facilities Certified Agreement 2000 (2005) 139 IR 34. The decision in Kellogg Brown concerned an application to terminate a certified agreement pursuant to s. 170MH of the WR Act. The Full Bench observed:
The absence of any reference to the interests of the negotiating parties in s.170MH(3) is significant. It follows that the views of persons bound by the agreement may be relevant to the exercise of the discretion if they shed light upon the effect of termination on the public interest, but they should not be given any independent weight. To do so would be to import into the application of the section something which on its proper construction it does not include.
The notion of public interest refers to matters that might affect the public as a whole such as the achievement or otherwise of the various objects of the Act, employment levels, inflation, and the maintenance of proper industrial standards. An example of something in the last category may be a case in which there was no applicable award and the termination of the agreement would lead to an absence of award coverage for the employees. While the content of the notion of public interest cannot be precisely defined, it is distinct in nature from the interests of the parties. And although the public interest and the interests of the parties may be simultaneously affected, that fact does not lessen the distinction between them.”[22]
The objects of the Act include ensuring a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions through the National Employment Standards, modern awards and national minimum wage orders.[23] In these applications the parties accept that the Dredging Award would have default application in the absence of the Agreements.
It is difficult to envisage how the termination of the Agreements would raise any public interest considerations let alone be contrary to the public interest where no employees are engaged under their terms and the applicant does not intend to do so in the future.
The concerns expressed by AIMPE must be measured against the fact that no employees are currently or likely to be covered by the Agreements in their existing form. The applicant has not won any work in recent times in a depressed dredging market. The Non Propelled Agreement has not been used for over three and a half years and the Propelled Agreement for over 12 months. The evidence suggests that the effect of terminating the Agreements would not differ from the current circumstances, where no employees have been engaged under their terms and conditions of the Agreements since August 2014 and January 2017 respectively.
On the evidence presented I am satisfied that it is not contrary to the public interest to terminate the Agreements.
Views/circumstances of the employees and the likely effect that the terminations will have on each of them
The applicant states that it has not engaged any employees under the Non Propelled Agreement since August 2014 and the Propelled Agreement since January 2017, because it has not been able to win any dredging work that the Agreements would cover. It is therefore not possible to obtain the views of employees in relation to the Agreement being terminated.
Although s.226(b) of the Act specifically requires the Commission to take into account the views of employees covered by the Agreements (of whom there are none), the Commission appears to be able to take into consideration the views of other persons when taking into account “all the circumstances”. Through the evidence of Mr Matthey, AIMPE referred to comments made by the applicant’s Australian employees engaged overseas and not currently covered by the Agreements stating they were happy with the current Agreements and would not accept any lesser terms and conditions. Mr Matthey’s evidence was not subject to cross examination by the applicant.
Accepting that the continuation of the Agreements in their current form has prevented the applicant from winning work, it is difficult to accept the logic of the overseas employees (and not covered by the Agreements) that the Agreements should remain unchanged.
Views and circumstances of the employer and the likely effect termination of the Agreements’ will have on them
The applicants have been made on the ground that the Agreements’ terms and conditions make it uncompetitive to win work. The applicant submitted that other dredging companies employ their Engineers on lesser rates and conditions than those contained in the Agreements.
The applicant submitted that since the decline in the dredging industry less work now exists to be shared amongst all dredging companies. The Agreements were created in a ‘boom’ time and do not reflect current market rates and conditions.
The applicant has no active projects in Australia in which it directly engages any employees to perform dredging work as such I accept the applicant’s position that the Agreements are a barrier to obtaining new work for Engineers.
The circumstances of the employer favour termination of the Agreements.
Views of AIMPE
AIMPE’s reasons for opposing the Agreement terminations are summarised above and are focussed on keeping the Agreements in place and not allowing the terms and conditions to drop to the level of the Dredging Award.
It is put that termination of the Agreements would have the effect of leaving Engineers with a rate of pay below that of employees they supervise. While this would be the legal effect, as the Boskalis Australia MUA Contract Propelled Dredging Enterprise Agreement 2016 continues to operate, it would not be the actual outcome as Mr Boere’s evidence was that manning agents would be used to engage Engineers paid at market rates.
It is unclear to the Commission how termination of the Agreements would have the effect of introducing, as submitted by AIMPE a profound distortion of the labour market. This is all the more the case as AIMPE also submits that the applicant’s proposed business model cannot be introduced based on the government migration policy.
As stated above the Agreements have not been utilised for a significant period of time. There is no evidence before the Commission to verify AIMPE’s concerns regarding discrimination, freedom of association and the objects of the Act and how those concerns relate to the applications before the Commission.
Conclusion
The Full Bench in Aurizon extracted the various sections of the Act relevant to the bargaining, making, approving, varying and terminating enterprise agreements. Having done so the Full Bench concluded:
“The legislative scheme therefore enables and facilitates good faith bargaining for an enterprise agreement. It also facilitates the making of enterprise agreements but does not mandate that result. Once an enterprise agreement is made and approved by the Commission, it seems clear that the legislative scheme does not intend that such agreements operate in perpetuity. Agreements have a finite nominal life. At the end of the nominal life of an agreement, bargaining parties may bargain for a new agreement utilising all of the tools available under the Act; or a person to whom an agreement applies may take steps to bring the agreement to an end in accordance with the provisions of the Act; or both may occur.”[24]
In these applications the applicant has chosen not to entertain bargaining for new agreements based on its particular circumstances. However I also accept the applicant’s submissions that, in any event, bargaining for replacement enterprise agreement under the provisions of the Act is unable to occur where the employer has no employees and is not establishing or proposing to establish a genuine new enterprise via a greenfield agreement (s.172(2)(b) of the Act).
Having regard to the evidence of Mr Boere it is unlikely that employees will be engaged under the terms and conditions of the Agreements in the foreseeable future, if at all. The Non Propelled Agreement has been inoperative for nearly 4 years which supports this conclusion.
The applicant submits that a lack of any employees engaged under an agreement is a strong supportive factor for its termination[25] and that since making the termination applications they have not secured any work for which the Agreements would have application.
The applicant has satisfied the Commission that the requirements of s.225 of the Act have been met and that there is no evidence before the Commission in adopting the approach of the Full Bench in Kellogg and enunciated in Aurizon that indicates it would not be appropriate to terminate the Agreements. As stated by the Full Bench in Aurizon at [176]:
“….Ultimately, it cannot be expected that terms and conditions of employment contained in an enterprise agreement with (sic) continue unaltered in perpetuity after the agreement has passed its nominal expiry date. Terms and conditions may be altered by making a new agreement or by terminating the existing agreement. The statute guarantees the continuation of the safety net, not the terms and conditions contained in a nominally expired enterprise agreement.”
For the reasons stated above, the Agreements will be terminated in accordance with s.226 of the Act.
Accordingly, Orders [PR601636 and PR601637] to this effect will be issued. The Agreement terminations are to take effect 7 days from the date of this decision.
DEPUTY PRESIDENT
Appearances:
Mr David Parker and Ms Liana D’Ascanio AMMA on behalf of the applicant
Mr Marin Byrne AIMPE
Hearing details:
Sydney with VC to Perth
2018
26 March
[1] [2018] FWCA 556
[2] There are some noted exclusions set out in clause 5.2 of the Propelled Agreement
[3] Clause 4
[4] Mr Boere’s statutory declaration referred to May 2016 as being the last time the Agreement was used, however he corrected this in his oral evidence to August 2014.
[5] 31 October 2017 and 8 December 2017
[6] Witness statement of Mr Matthey 29 November 2017 at [16]
[7] Submissions of 30 November 2017 at [6]
[8] Ibid at [26] – [31]
[9] Submissions of 30 November at [37]
[10] The applicant’s statutory declaration was made in the name of Peter Boere
[11] Dated 31 October 2017 Exhibit A1
[12] Australian Maritime Officers’ Union (AMOU), Maritime Union of Australia (MUA), Australian Institute of Marine and Power Engineers (AIMPE)
[13] Further witness statement of Mr Boere at [7] 8 December 2017 Exhibit A2
[14] Ibid at [15]
[15] (2005) 139 IR 34
[16] Submissions of 1 November 2017 at [14]
[17] Ibid at [19]
[18] Ibid at [26]
[19] [2010] FWA 2434 at [10]
[20] PR955357
[21] [2015] FWCFB 540
[22] (2005) 139 IR 34 at 40
[23] S.3(b)
[24] [2015] FWCFB 540 at [126]
[25] See for example: LCR Group Pty Ltd /CFMEU Collective Agreement 2012-2016 [2016] FWCA 9193 at [19]; Laing O'Rourke Australia Construction Pty Ltd & CFMEU (WA) - WA Rail Infrastructure - Rail Track and Associated Works Workplace Agreement 2010-2012 [2016] FWCA 6057
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