Cadeford Pty Ltd T/A Integra Floors

[2019] FWCA 8227

[2019] FWCA 8227

FAIR WORK COMMISSION

DECISION

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

Cadeford Pty Ltd T/A Integra Floors
(AG2019/4166)

CADEFORD PTY LTD T/A INTEGRA FLOORS AND CFMEU UNION COLLECTIVE AGREEMENT 2012-2016

Building, metal and civil construction industries
COMMISSIONER HUNT	BRISBANE, 5 DECEMBER 2019

Application for termination of the Cadeford Pty Ltd t/a Integra Floors and CFMEU Union Collective Agreement 2012-2016.

[1] On 31 October 2019 Cadeford Pty Ltd T/A Integra Floors (the Employer) made an application pursuant to s.225 of the Fair Work Act 2009 (the Act) to terminate the Cadeford Pty Ltd t/a Integra Floors and CFMEU Union Collective Agreement 2012-2016 (the Agreement). The Agreement has passed its nominal expiry date.

[2] The application was supported by a statutory declaration from Mr Hans Beeltje, Managing Director of the Employer which declared, amongst other things, that there are no employees who are covered by the Agreement.

[3] The Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) is an employee organisation covered by the Agreement.

First application withdrawn

[4] The application in this matter is the Employer’s second application to terminate the Agreement pursuant to s.225 of the Act. Its first application (matter number AG2019/2709) was also allocated to me, and I conducted a telephone conference in respect of that matter on 26 August 2019. I addressed with the Employer a number of significant concerns I held with the application. Following correspondence sent to the Employer and to the CFMMEU on 26 August 2019 outlining the concerns I had with the application, the first application was ultimately withdrawn on 26 September 2019.

Second application - conference

[5] Upon allocation of the present matter to me, my Associate wrote to the parties and proposed that this matter should be listed for conference before me. In the course of arranging the time and date for that conference, the CFMMEU wrote to my chambers and stated that it did not wish to be heard in relation to this matter.

[6] A conference of this matter was convened before me in Brisbane on 3 December 2019. Mr Hans Beeltje and Mr Brent Beeltje, Business Operations Manager of the Employer, appeared for the Employer at the conference. The CFMMEU did not appear at the conference.

Concerns relevant to greenfields agreement

[7] During the conference I repeated to the Employer the concerns I held relevant to the first application to the Commission. To summarise they are as follows:

(a) The Agreement is a greenfields agreement, approved by Senior Deputy President Richards on 22 September 2014;

(b) The Form F20 statutory declaration sworn by Mr Hans Beeltje on 20 August 2014 before Ms Michelle Clare, Justice of the Peace, declared that the agreement covers a genuine new enterprise that the employer is establishing or is proposing to establish;

(c) Mr Beeltje answered ‘No’ to the question on the form: ‘Does the employer have existing similar enterprises or is the employer contemplating the establishment of a similar enterprise?’;

(d) Relevant to how the approval of the agreement would be in the public interest, Mr Beeltje answered:

(i) The agreement relates to a genuine new enterprise that the employer is establishing or proposing to establish and the employer has not employed any of the persons who will be necessary for the normal conduct of the enterprise and will be covered by the agreement.

(ii) The terms of the agreement are such that no employee who will be covered by the agreement will be disadvantaged compared to any existing award or the National Employment Standards and provide wages and conditions of employment which are comparable to the standards applying on other projects of a similar kind.

(iii) The agreement will provide industrial certainty and stability for the construction of a major project.

(e) The Form F21 statutory declaration sworn by Mr Kane Pearson, CFMEU Divisional Branch Assistant Secretary, stated the following relevant to how the approval of the agreement would be in the public interest:

(i) The Employee Organisations have appropriate coverage of the majority of the employees;

(ii) The agreement reflects construction project wage outcomes appropriate for the subject project;

(iii) A Greenfields Agreement provides security in the projected wages cost for the Employer and for the Project.

[8] The Agreement was signed by Mr Hans Beeltje on 20 August 2014, witnessed by Ms Clare. The Agreement was signed on behalf of the CFMEU (as it then was) by Mr Michael Ravbar, Branch Secretary on 21 August 2018, witnessed by Ms Clare.

[9] The concern I held with both the first and second applications is that on the information currently before the Commission, it is far from clear as to how the work that was proposed to be performed under the greenfields agreement could be said to, pursuant to s.172(2) of the Act, “relate[s] to a genuine new enterprise that the employer or employers are establishing or propose to establish”.

[10] The information provided by the Employer to the Commission is that prior to the Agreement being made it engaged independent contractors to perform flooring services, operating mostly in the residential and small commercial projects areas. Upon entering into the greenfields agreement it had decided to focus on quoting and winning commercial projects, which it had hoped to do with employees, not independent contractors.

[11] Mr Hans Beeltje stated that he approached the CFMEU, and noting that the Employer did not employ any employees, it was decided that a greenfields agreement would be entered into. Mr Beeltje stated that the CFMEU completed all of the paperwork and he attended the CFMEU office to read though the forms and complete the statutory declaration.

[12] There is no evidence before the Commission, other than what was asserted in the statutory declarations in support of approval of the greenfields agreement that supports the proposition that the Employer had or was establishing a genuine new enterprise. The Employer did not make any commercial changes to its operation, and there was no difference to its corporate structure at all; it simply began performing commercial work as opposed to (mostly) domestic work. There appears not to have been the “construction of a major project” as sworn by Mr Beeltje, or “the Project” as sworn by Mr Pearson. No employees were ever engaged under the Agreement as the Employer continued to engage independent contractors.

Requirements to terminate the Agreement

[13] Section 226 of the Act sets out the conditions which must be met for an agreement to be terminated pursuant to s.225 of the Act. Section 226 of the Act provides as follows:

“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.”

Consideration

Are there any employees covered by the Agreement?

[14] During the conference of 3 December 2019, I informed Mr Hans Beeltje and Mr Brent Beeltje, that it was difficult to accept that there might be no employees covered by the Agreement for whom the Commission would be required to obtain their views to terminate the Agreement. The Employer’s reasons for seeking the termination of the Agreement is because it is not Code compliant with the Building Code 2013 and the Code for the Tendering and Performance of Building Work 2016, and it is therefore unable to secure federal government work.

[15] Mr Hans Beeltje asserted that all those who perform work for the Employer are bona fide contractors. There was much discussion as to what sort of services are provided by these persons, some of whom are sole traders, and many organisations are incorporated. Following the conference, the Employer provided copies of invoices sent by the purported contractors to the Employer, and detailed that the contractors:

(a) Provide their own tools, safety equipment, vehicles and insurances;

(b) Pay their own superannuation as required based on their business set-up;

(c) Provide materials such as adhesives, underpayments etc.;

(d) Provide warranties on their work, and remedy defects at their cost promptly;

(e) Are able to carry out the works in whatever manner they see fit, as long as it is within the scope and schedule provided, and they abide by Australian Standards, and flooring supplier’s guarantees; and

(f) Once the work is completed, the contractor provides a tax invoice for the lump sum as per the contract, not at an hourly rate.

[16] On the information provided to the Commission, I am satisfied that installers who perform work for the Employer are not employees for whom the Commission must seek the views of.

Non-payment of superannuation to sole trader contractors

[17] I did, however, repeat my earlier advice to the Employer that relevant to sole trader contractors who primarily perform their services for labour, the Australian Taxation Office’s superannuation guarantee ruling SGR 2005/1 provides that a principal is required to pay superannuation to the contractor. This ruling does not apply to incorporated contractors. Despite providing this ruling to the Employer in August 2019 and reaffirming my position on this matter during the conference of 3 December 2019, the Employer maintains that it is not required to pay superannuation to sole trader contractors. I have decided to forward a copy of this decision to the Australian Taxation Office for its consideration.

Public interest consideration

[18] The Employer wishes to be able to quote and win Federal Government work, which it is currently prevented from winning due to the Agreement not being code-compliant.

[19] Despite the very serious concerns I have as to how the purported greenfields agreement came about, and what was stated by the Employer and by the then-CFMEU to the Commission in having the Agreement approved, I do not consider it is contrary to the public interest to terminate the Agreement.

[20] 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.

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

[22] The termination will take effect from today, 5 December 2019.

[23] Having reviewed the statutory declarations completed by Mr Hans Beeltje and Mr Pearson made to seek approval of a greenfields agreement, upon which I hold concerns as to whether those swearing the statutory declaration could have believed it to be true that the Employer had or was proposing to establish a genuine new enterprise, I am referring this decision and the file to the General Manager of the Commission for consideration as to whether the statutory declarations should be referred to relevant agencies to investigate potential breaches of Commonwealth law.

COMMISSIONER

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