Broadspectrum (Australia) Pty Ltd T/A Broadspectrum

[2016] FWCA 9197

[2016] FWCA 9197

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.225 - Application for termination of an enterprise agreement after its nominal expiry date

Broadspectrum (Australia) Pty Ltd T/A Broadspectrum
(AG2016/5587)

TRANSFIELD SERVICES CORROSION PROTECTION (ASC)/CFMEU ENTERPRISE AGREEMENT 2013 - 2015

Manufacturing and associated industries
COMMISSIONER PLATT	ADELAIDE, 23 DECEMBER 2016

Application for termination of the Transfield Services Corrosion Protection (ASC)/CFMEU Enterprise Agreement 2013 - 2015.

[1] This decision concerns an application by Broadspectrum (Australia) Pty Ltd T/A Broadspectrum (Broadspectrum) pursuant to s.225 of the Fair Work Act 2009 (the Act) to terminate the Transfield Services Corrosion Protection (ASC)/CFMEU Enterprise Agreement 2013-2015 (Agreement). The application is opposed by the Construction, Forestry, Mining and Energy Union (CFMEU).

[2] The Agreement is a single enterprise agreement and expired on 30 June 2015. The CFMEU is bound by the Agreement.

[3] There are currently no employees covered by the Agreement.

[4] The matter was listed for directions on 16 November 2016, and the parties were required to provide written submissions.

[5] A hearing was conducted on 13 October 2016.

[6] At the conclusion of the hearing the parties were given an opportunity to provide additional written submissions by 7 December 2016.

[7] In support of the application Broadspectrum tendered a statement 1 from Mr Michael Bourke, Operations Manager responsible for Broadspectrum’s operations at the Australian Submarine Corporation (ASC) at Osborne, South Australia. Mr Bourke’s evidence was uncontested and is summarised as follows:

● Broadspectrum has historically worked for ASC North providing marine painting services;
● in 2015, the marine painting services contract was put to tender with a key component being provision of 24 hour, 7 day week (24/7) services.
● the Agreement does not allow for a 24/7 roster arrangement;
● in early 2016, Broadspectrum was informed that it did not win the ASC contract, a key reason was the inability of Broadspectrum to provide 24/7 roster arrangements.
● as a result, Broadspectrum employees were demobilised and as at 20 August 2016, no employees of Broadspectrum perform work at ASC North; and
● Mr Bourke did not believe any further substantive work would be gained if the Agreement continued to apply.

[8] Broadspectrum submitted that that:

● the Agreement applies to the marine painting work performed by Transfield (now renamed Broadspectrum) at the ASC North Facility at Osborne in South Australia. the Agreement’s places a restriction on a 24/7 a week roster system roster arrangement;
● this restriction contributed to Broadspectrum failing to secure a further contract with the ASC and as a result all employees were demobilised;
● there were no employees who would be impacted by the termination of the Agreement;
● the termination of the Agreement would potentially increase Broadspectrum’s prospects of winning work at ASC North; and
● the termination of the Agreement would not be contrary to the public interests as:

• any future work would be subject to the relevant modern award which would provide an appropriate industrial standard consistent with object 3(b) of the Act, and this would not be a barrier to bargaining for an enterprise agreement; and



• the termination of the Agreement would assist Broadspectrum’s securing new work which would promote productivity and economic growth consistent with object 3(a) of the Act.

[9] The CFMEU opposed the termination of the Agreement on the basis that the Commission could not be satisfied that it would not be contrary to the public interest. In support of this submission the CFMEU submitted:

● if the Agreement was terminated the work would be covered by the Manufacturing and Associated Industries and Occupations Award 2010 (Award) and this Award contained significantly less favourable terms and conditions;
● the Agreement had only expired 15 months ago;
● the termination of the Agreement would advantage Broadspectrum in any further enterprise bargaining negotiations;
● Broadspectrum’s motivations are relevant. 2 The alleged purpose of the application is to “scale back the employer’s platform for future negotiation which undermines the principles of good faith bargaining;”3
● as Broadspectrum did not have any employees and thus there was no imperative nor cost implications that would result if the Agreement was not terminated.

[10] There is no dispute that the hours of work arrangements contained in the Agreement contributed to the loss of the ASC work.

Applicable Law

[11] Subdivision D of Division 7 contains provisions which enable the termination of an enterprise agreement to be terminated after the agreement has passed its nominal expiry date.

[12] The provisions are as follows:

“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.

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.

[13] The Act requires two issues to be considered, the public interest (s.226(a)); and the appropriateness of termination (s.226(b)).

[14] The public interest is not restricted to the interests of the parties, and includes 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. 4 The determination of where the public interest lies requires a balancing of interests and is a question of fact and degree.5

[15] Pursuant to section 226(b) of the Act the Commission must be satisfied that termination of the Agreement must appropriate before it can be terminated. “Appropriateness” is a broad discretionary standard. Reasonable minds may differ on what is appropriate in any given set of circumstances. 6

[16] The objects of the Act are relevant to the exercise of the power in s.226(b). If termination promotes these objects then that is a material factor in favour of considering termination appropriate. If termination however, is contrary to the objects then the reverse applies. 7

Consideration

Would the Termination of the Agreement not be contrary to the public interest?

[17] Broadspectrum submitted that terminating the Agreement is not contrary to public interest because:

● the operational restrictions contained in the Agreement contributed to the non-award of the ASC contract and reduced the likelihood of Broadspectrum securing future contracts which would facilitate employment, which was in the public interest;
● it is not contrary to public interest a proper industrial standards would be maintained through the Award for future employees; and
● termination of the Agreement would not prevent future bargaining for a new Agreement.

[18] The CFMEU submitted that terminating the Agreement is contrary to public interest because:

● the application to terminate the Agreement is based upon the employer’s intention to reduce the terms and conditions applicable to employees to the Award level which would advantage Broadspectrum in future Agreement negotiations, and undermines good faith bargaining principles; and
● as Broadspectrum does not have any employees there is no time or cost imperative for the Agreement to be terminated.

[19] When balancing the competing arguments I find that the potential to increase employment, particularly considering South Australia’s current economic climate, overrides any potential detriment to any future bargaining position. In this regard I place particular weight on the uncontested evidence of Mr Bourke. I am not persuaded that the termination of the Agreement will undermine collective bargaining.

[20] In relation to the issue of the maintenance of proper industrial standards, future employees will have the benefit of the Award safety net and the National Employment Standards. I do not accept that this would be an inadequate safety net.

[21] I am satisfied that the termination of the Agreement is not contrary to the public interest.

Is it appropriate to terminate the agreement?

s.226(b)(i) – Views of the employees

[22] As there are no employees covered by the agreement no employees would be affected by the termination of the agreement.

s.226(b)(i) – Views of the employer

[23] The employer’s view is that the Agreement should be terminated for the reasons detailed above.

s.226(b)(i) – Views of the employee organisations

[24] The CFMEU view is that the Agreement should not be terminated for the reasons detailed above.

s.226(b)(ii) – Circumstances of the employer

[25] Broadspectrum submits that the termination of the Agreement may facilitate employment by improving its prospects of securing a tender with the ASC.

[26] The securing of future contracts and the resultant creation of employment opportunities is consistent with s.3 - Objects of the Act, and weighs in favour of terminating the Agreement.

s.226(b)(ii) – Circumstances of the employee organisations

[27] The position of the CFMEU is that if the Agreement is terminated it will alter the bargaining position between it and Broadspectrum, if circumstances arise in the future where the Broadspectrum employed persons and there were negotiations for an enterprise agreement.

[28] I note that the Agreement expired almost 18 months ago, and this matter does not involve a circumstance where the employer and the CFMEU are currently (or recently) engaged in bargaining for a replacement agreement. In the event that a contract is secured and employees are engaged, it will be open to the CFMEU to commence a bargaining process.

[29] In my view the circumstances of the CFMEU do not weigh against terminating the Agreement.

Conclusion

[30] In consideration of the material before me relevant to s.226(b)(i) and (ii), I consider that it is appropriate to terminate the Agreement.

[31] In accordance with s.226, I must terminate the Agreement. The application to terminate the Agreement is approved.

[32] The termination will take effect from 23 December 2016.

COMMISSIONER

 1   Exhibit A1.

 2   Allen v O’Brien Pty Ltd T/A O’Brien Electrical Services Enterprise Agreement 2010-2014 [2016] FWCA 1906.

 3   Ibid.

 4   Aurizon Operations Limited and Ors [2015] FWCFB 540, Referring to Re Kellogg Brown and Root Bass Strait (Esso) Onshore/Offshore Facilities Certified Agreement 2010

 5   High Court of Australia in Queensland Electricity Commission; Ex parte Electrical Trades Union of Australia (1987) 21 IR 151.

 6   Tahmoor Coal Pty Ltd [2010] FWA 6468.

 7   Ibid.

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