Boskalis Australia Pty Ltd

[2018] FWCA 556

[2018] FWCA 556

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.225—Enterprise agreement

Boskalis Australia Pty Ltd
(AG2017/3648)

BOSKALIS AUSTRALIA CONTRACT PROPELLED DREDGING AMOU UNION COLLECTIVE AGREEMENT 2011

Maritime industry
DEPUTY PRESIDENT BULL	SYDNEY,  11 APRIL 2018

Termination of an agreement after its nominal expiry date, AMOU opposed to termination, public interest test, when the FWC must terminate an agreement

[1] On 18 August 2017, an application was made to the Fair Work Commission (the Commission) by Boskalis Australia Pty Ltd (the applicant) to terminate the Boskalis Australia Contract Propelled Dredging AMOU Union Collective Agreement 2011 (the Agreement) pursuant to s.225 of the Fair Work Act 2009 (the Act).

[2] The Agreement is a single enterprise agreement.

[3] On the same day applications to terminate the Boskalis Australia Contract Propelled Dredging AIMPE Union Collective Agreement 2012 and Boskalis Australia Dredging (Non Propelled Dredges, Greenfield Agreement 2012 were made to the Commission, which are subject to a separate decision. 1

[4] The Agreement was approved by the Commission on 10 August 2012 and operated from 17 August 2012 with a nominal expiry date of 30 June 2016. The 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 Agreement has been in operation for over 5 years.

[5] A statutory declaration from Mr Petrus Boere made on 18 August 2017, was filed in support of the application as required by Rule 26 of the Fair Work Commission Rules 2013 and in accordance with Part 2-4 of the Act. Mr Boere’s occupation is described as the applicant’s General Manager.

[6] On 14 September 2017 Ms Jan Thompson, an Industrial Officer for the Australian Maritime Officers Union (AMOU), provided the Commission with a statement opposing the application.

[7] In view of the AMOU’s opposition to the Agreement termination a conference was held before the Commission on 3 October 2017, with a further conference held on 16 November 2017 in an attempt to resolve the differences between the parties.

[8] Following the unsuccessful attempt to resolve the AMOU’s opposition to the application, the Commission issued directions in regard to further submissions and witness statements which were received from both parties including a further amended statement from Mr Boere.  3

[9] In view of the conflicting submissions and witness statements of both parties the Commission provided an opportunity for any witness evidence to be subject to cross-examination. The AMOU sought to cross examine Mr Boere 4 and the application was listed for a hearing to enable this to occur.

Relevant Legislation

[10] 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.”

[11] As stated, the Agreement has passed its nominal expiry date of 30 June 2016. The applicant is an employer covered by the Agreement and thus has standing to make the termination application.

[12] 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.”

Applicant’s evidence and submissions

[13] The applicant states that its dredging work in Australia has included the construction and maintenance of ports and waterways, land reclamation and coastal defence.

[14] In respect of enterprise agreements, the applicant’s practice has been to enter into different enterprise agreements with the three maritime unions. The Ratings (deckhands) who are eligible be members of the Maritime Union of Australia (MUA), Marine Engineers eligible to be members of the Australian Institute of Marine and Power Engineers (AIMPE) and Masters and Deck Officers eligible members of the AMOU.

[15] Mr Boere’s evidence was that ordinarily a typical vessel in the applicant’s Australian dredging operations would be manned by two Deck Officers (AMOU) two Engineers (AIMPE) and 13 Ratings (MUA). 5⁶ This is the Australian sourced labour with a further 3 Deck Officers sourced internationally from a core group of employees who regularly work with the vessel, as the applicant’s fleet of vessels are allocated to projects around the world.

[16] The thrust of the applicant’s submissions was that the Agreement, which was well past its nominal expiry date, contained rates and conditions that were no longer reflective of the current market rates and conditions, as they had been negotiated in 2012 during a boom period for the dredging industry. On this basis the applicant was unable to secure work currently or into the future for Deck Officers while the Agreement remained in force.

[17] The applicant submitted that not only does it not employ Deck Officers who would be covered by the Agreement; it does not currently employ any Ratings or Engineers.

[18] The applicant is also a party to two other dredging agreements which cover Engineers working on propelled and non-propelled dredges that the applicant has also made applications to terminate referred to above. 7

[19] In respect of the enterprise agreement coverage of Ratings, the Boskalis Australia MUA Contract Propelled Dredging Enterprise Agreement 2016 8(Boskalis 2016 MUA agreement) implemented a 10% reduction in salaries for classifications covered by that agreement;9 however as stated above, no employees are currently engaged under the Boskalis 2016 MUA agreement.

[20] The applicant has been involved in discussions with the MUA since September 2016 on an industry level basis to discuss rates and conditions of employment for classifications covered by the Boskalis 2016 MUA Agreement. However as the applicant does not currently employ any Ratings these discussions are not considered enterprise bargaining within the meaning of the Act. Furthermore no Notice of Employee Representational Rights (NERR) has been issued in respect of these discussions which would be required had negotiations under the Act for a replacement agreement with the MUA commenced.

[21] The applicant states the Boskalis 2016 MUA agreement is currently competitive as there are no new or recently made enterprise agreements in the dredging industry that set a new industry benchmark for terms and conditions for Ratings.

[22] On the other hand the applicant submits it is currently uncompetitive with its major competitor Jan de Nul in relation to the employment of Deck Officers (and Engineers) by virtue of the approval of the Jan de Nul (Australia) Pty Ltd Enterprise Agreement 2016 covering those classifications.

[23] In respect of the Commission’s consideration of the public interest, the applicant broadly submits that termination of the Agreement would not be contrary to the public interest in any way. The applicant cites the judgment of the Full Court of the Federal Court in Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Aurizon Operations Ltd 10, which expounded on matters constituting the public interest.

[24] Given there are no employees currently employed under the Agreement the applicant says that the termination of the Agreement would have no detrimental impact in respect of the objects of the Act, on levels of employment and inflation or the maintenance of proper industrial standards.

[25] With the applicant not having secured any future work to which the Agreement could apply, it submits that any consideration of the public interest, to the extent it applies to current or potential employees, cannot be a relevant consideration, and is a factor in favour of terminating the Agreement.

[26] In the context of bargaining for a replacement agreement, the applicant states 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.” 11

[27] In any event, the applicant suggests there is no predisposition against the public interest in circumstances where collective bargaining is or could be taking place, and that nothing in ss.225-226 of the Act mandates that bargaining must have commenced or reached a certain point before termination of the Agreement can occur.

[28] The applicant submits it is positively in the public interest to terminate the Agreement, as the Agreement’s terms and conditions have the potential effect of constraining it from conducting its business in a productive manner. On this point, it is submitted that the Agreement effectively renders it uncompetitive, so much so, that the Agreement is now “unaligned with current market conditions.”

[29] The applicant’s outline of submissions detailed the lack of competitiveness with its competitors. 12 In these circumstances, the applicant submits that it should be able to avail itself of all options under the Act, including the termination of the Agreement. To that end, the applicant contends that the Act does not intend for enterprise agreements to continue unchanged and in perpetuity.

[30] The applicant also contends that the Commission, when considering the public interest, should be guided by the ‘likely foreseeable’consequences of the termination, rather than ‘speculation’ about ‘possible’ consequences.

[31] The applicant argues that termination would have the likely and foreseeable outcome that it would have a higher chance of securing future work in the current environment.

[32] In respect of the draft agreement prepared by the AMOU, the applicant states that it has advised the AMOU that it was unacceptable as it did not reflect the prevailing market rates.

AMOU’s evidence and submissions

[33] The AMOU was a bargaining representative for the negotiation of the Agreement and pursuant to s.210(2) of the Act the Agreement covers the AMOU. In opposing the termination of the Agreement the AMOU provided written submissions and a statement from Ms Thompson.

[34] It is put by the AMOU that termination of the Agreement ‘will have a detrimental impact on the achievements of the objects of the Act, employment levels, inflation and the maintenance of proper industrial standards.’ 13

[35] The AMOU make reference in their submissions to a recommendation of the Senate Education and Employment References Committee into Corporate Avoidance of the Fair Work Act 2009 where at recommendation 4.78 the Committee recommends that s.226 be amended to prevent the Fair Work Commission terminating an enterprise agreement where workers would be worse off as a result of the termination.

[36] The AMOU submit as the nature of dredging work is short term contractual work it is not unusual that there are no employees employed directly by the applicant at this point in time, 14 which is reflected by the fact that the Agreement is primarily drafted for casual employees.

[37] It is submitted by the AMOU that as the applicant has been involved in discussions with the MUA regarding rates and conditions of employment, albeit in conjunction with a number of other dredging companies, it cannot therefore argue there is no business case to negotiate a replacement agreement with the AMOU.

[38] The AMOU refer to an email received from Mr Boere of 9 August 2017 seeking a draft replacement agreement, and state that this is in contradiction to Mr Boere’s declaration that the applicant has no intention to bargain for a replacement agreement.

[39] The AMOU submits it is willing to enter into negotiations with the applicant to secure a new agreement. The AMOU says this is demonstrated by the fact that on 4 October 2017 it forwarded a draft agreement to Mr Boere for his consideration.

[40] The AMOU submits that it is contrary to the public interest to put employees back on award wages and conditions as the floor for negotiating a new pay deal. It says renegotiation of the Agreement should be allowed to commence without the threat of reducing employment conditions to those of the Dredging Industry Award 2010 (the Dredging Award).

[41] The AMOU submits that it would be contrary to the public interest should the Commission terminate the Agreement when the sole purpose would appear to be to engage foreign workers instead of Australian workers on award conditions while at the same time it continues to negotiate with the MUA.

[42] The AMOU also submits that the applicant’s treatment of MUA members through the negotiation of an enterprise agreement in 2016 manifests an injustice to AMOU members and is counterintuitive to collective bargaining. 15

Determination under s.226

[43] Section 226 of the Act, as extracted above, in summary, 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 is in this case the AMOU); and the circumstances of the employees, the employer and the AMOU including the likely effect that the termination will have on each of them.

[44] As stated by VP Watson in Energy Resources of Australia Ltd v Liquor, Hospitality and Miscellaneous Union 16, 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. It displaces any ‘general discretion’ in the matter.

Is termination of the Agreement contrary to the public interest?

[45] 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.

[46] The Agreement has been in operation since August 2012 and passed its nominal expiry date some 12 months ago. The evidence of Mr Boere was that no employees have been engaged under the Agreement since January 2017.

[47] The Full Bench in Kellogg Brown and Root Pty Ltd and others (Kellogg) 17 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.”

[48] 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 18 (Aurizon).

[49] In reiterating 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.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.” 19

[50] The Commission can only have regard to the terms of the Act as it exists at the time of consideration. The AMOU’s reference to the Report of the Senate Education and Employment References Committee into Corporate Avoidance of The Fair Work Act 2009 recommending a change to s.226 of the Act which was determined along traditional ‘party’ lines where a Coalition Senators’ dissenting Report was also handed down, cannot override the legislation as it currently exists.

[51] It is unclear from the submissions of the AMOU how termination of the Agreement would result in a reduction of employment of Australian seafarers or have a detrimental impact on the achievement of the objects of the Act. The AMOU submits that Award conditions would foster the engagement of foreign labour as the cost of transporting foreign workers would be offset by the reduction of wages. On the basis that any reversion to award rates and conditions would apply to all employees of the applicant, this submission is speculative at best.

[52] 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. 20 In this case the Dredging Award would have application in the absence of the Agreement.

[53] The circumstances of this application are such that consequences of termination would have limited effect, if any, beyond the immediate parties. There was no evidence before the Commission to demonstrate otherwise.

[54] I am not persuaded that the arguments put forward by the AMOU result in the conclusion that it would be contrary to the public interest to terminate the Agreement.

[55] I am satisfied that it is not contrary to the public interest to terminate the Agreement.

Views and circumstances of the employees

[56] The applicant states that it has not engaged any employees under the Agreement (or any other enterprise agreement) since January 2017, a period of well over 12 months. This is because it has not been able to secure any dredging work. It is therefore not possible to obtain the views of employees as to whether they are in favour of the Agreement being terminated.

[57] The AMOU acknowledge that no employees are currently employed by the applicant under the Agreement but refer to comments purportedly made by ex-employees of the applicant. 21 Section 226 of the Act specifically requires the Commission to take into account the views of employees covered by the Agreement, of whom there are none at the present time. While having regard to ex-employees’ opinions may be a matter the Commission would consider when taking into account ‘all the circumstances’ as the submission of the non employees is made on the basis of hearsay, little weight can be attached to them.

Views and circumstances of the employer

[58] In this matter it is the employer who has made the application to terminate the Agreement primarily on the basis that the Agreement’s terms and conditions make it uncompetitive to win work. The majority of its vessels have either left Australian waters or are for sale. Its competitors have either more favourable agreements in respect of winning work or no agreements at all. It was put that no other dredging company currently employs its Deck Officers on the superior rates and conditions contained in the Agreement.

[59] The Agreement was created in a ‘boom’ time and does not reflect the current market rates and conditions. The applicant submitted that since the decline in the resources boom, less than 5% of the ‘resources boom’ work exists in the industry to be shared amongst all dredging companies. The applicant’s turnover has decreased in accordance with the downturn in the dredging industry with turnover in 2017, being approximately 1% of its 2012/2013 levels. 22

[60] The applicant has no active projects in Australia in which it engages any employees to perform work. I accept the applicant’s position that the Agreement in its current form is a barrier to obtaining new work for Deck Officers.

[61] The circumstances of the employer favour termination of the Agreement.

Views of the AMOU

[62] The AMOU’s reasons for opposing the Agreement termination are summarised above and are directed towards ensuring that any future enterprise agreement negotiation commences with the terms and conditions of the Agreement being in place. There is also concern that the applicant is intending to utilise foreign labour and that they are refusing to negotiate with the AMOU for a new agreement while at the same time negotiating with the MUA.

[63] There is insufficient evidence before the Commission to verify the AMOU’s concerns over foreign labour and how it relates to the Agreement termination. The evidence does not demonstrate that the applicant is engaging in enterprise bargaining as per the Act with the MUA.

[64] The AMOU’s concerns must be given less weight than those of the employer in circumstances where there are no current employees, no work has been performed under the Agreement for over 12 months and the strong likelihood is that that no work will be secured into the future while the Agreement remains in operation.

[65] The AMOU’s written submissions contain a number of assertions which the applicant states it does not accept or has no knowledge of, and for which no corroborating evidence was provided. 23

Conclusion

The Full Bench in Aurizon extracted the various sections of the Act relevant to the bargaining for, making of, approving, varying and terminating of, enterprise agreements. Having done so the Full Bench then 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

[66] In this application the employer has chosen not to bargain for a new agreement, (and for reasons expressed below it is difficult to see how this could occur in the present circumstances) and has chosen to apply to have the Agreement terminated.

[67] The reality of the situation facing the applicant is that while it continues to have no work and no employees employed and covered under the Agreement, it is unable to bargain for a new agreement under the auspices of the Act as there are no employees to bargain with. For example a NERR cannot issue as required under s.173 to non-existent employees.

[68] I also accept that the applicant is unable to negotiate a Greenfields agreement as per s.172(2)(b) of the Act. This is because it does not at the present time meet the criteria of there being a genuine new enterprise that it is establishing or proposing to establish 25.

[69] The submissions of the applicant that there is no realistic possibility that any employees will ever be engaged under the terms and conditions of the Agreement are a strong and persuasive justification for its termination.

[70] It is unexceptional for the Commission to terminate nominally expired enterprise agreements where no employees are engaged at the time. 26

[71] The provisions and requirements of s.225 have been met and there is no evidence before me that indicates that on the approach endorsed by the Full Bench in Kellogg andenunciated in Aurizon, that it would not be appropriate to terminate the Agreement. 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.”

[72] It was put to Mr Boere in cross examination by the AMOU that there were other factors that can lead to the failure to gain work through a tender process other than price. These could include a tenderer’s work health and safety record, management systems, capability and capacity of key personal, suitability of equipment etc. Mr Boere was adamant that the key determinative factor that wins work is the tender price. 27

[73] It is true, as submitted by the AMOU, that termination of the Agreement will result in the Dredging Awardbecoming the legal minimum set of rates and conditions for any Deck Officers that the applicant may employ the future. Despite some discounting of enterprise agreement rates, 28 the likelihood of award rates and conditions actually applying would appear to be minimal. While I accept the AMOU submission the dredging work is by its nature generally short term and that it is not unusual that there are periods of no work, it is a matter of record that since the application was filed that the applicant has not secured any work for which the Agreement would have application and that this period of no work extends back to January 2017.

[74] For the reasons stated above, the Agreement will be terminated in accordance with s.226 of the Act.

[74] Accordingly, an Order [PR601578] to this effect will be issued. The Agreement termination is 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

Ms Jan Thompson AMOU

Hearing details:

Perth with VC to Melbourne

2018

1 March

Final written submissions:

Boskalis Australia

2018

8 January

The Australian Maritime Officers Union

2017

21 December

 1   [2018] FWCA 1841

 2   There are some noted exclusions set out in clause 5.2 of the Agreement

 3   23 November 2017

 4   Witness statement in the name of Petrus Boere Exhibit A1

 5   Witness Statement Mr Boere 23 November 21017 at [7] Exhibit A1

6 The AMOU submits that a typical dredge is manned by 5 Deck Officers. Outline of AMOU Submissions 21 December 2017 at [23]

 7   AG2017/3636 and AG2017/3642

 8   A greenfield agreement AG2016/6157 [2016] FWCA 7789

 9   Amended statement of Mr Boere at [43]23 November 2017

 10 [2015] FCAFC 126 at [11].

 11 Applicant’s amended submissions 24 November 2017 [21].

 12 Applicant’s amended submissions 24 November 2017 [26].

 13   AMOU outline of submissions 21 December 2017 [19] as per the reference in Communication, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Aurizon Operations Ltd [2015] FCAFC 126 at [41]

 14   Statement of Ms Thompson 14 September 2017

 15   AMOU submissions of 21 December 2017 [39]

 16   [2010] FWA 2434 at [10]

 17 (2005) 139 IR 34, PR955357

 18 (2015) 249 IR 55 [2015] FWCFB 540

 19 (2005) 139 IR at 40

 20   S.3(b)

 21   AMOU submission 21 December 2017 at [42]

 22   Witness statement of Mr Boere 23 November 2017 at [15]

 23   See paragraphs (49) (50) (62) and (65) of the AMOU written submissions 21 December 2017

 24   [2015] FWCFB 540 at [126]

 25   The expression genuine new enterprise includes a genuine new business, activity, project or undertaking see Note to s.172(2)

 26  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

 27   This question related to a report to the City of Gold Coast Council, the report was not tendered in evidence.

 28   AMOU outline of submissions 21 December 2017 at [50]

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