Cambridge Clothing Pty Ltd
[2023] FWC 1716
•24 JULY 2023
| [2023] FWC 1716 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.225—Enterprise agreement
Cambridge Clothing Pty Ltd
(AG2023/1608)
CAMBRIDGE CLOTHING COMPANY ENTERPRISE AGREEMENT 2014
| Retail industry | |
| DEPUTY PRESIDENT GOSTENCNIK | MELBOURNE, 24 JULY 2023 |
Application for termination of the Cambridge Clothing Company Enterprise Agreement 2014
Cambridge Clothing Pty Ltd (CCPL) has applied under s 225 of the Fair Work Act 2009 (Act) to terminate the Cambridge Clothing Company Enterprise Agreement 2014 (Agreement) after its nominal expiry date of 1 April 2019. CCPL is an employer covered by the Agreement. The Agreement was made by Cambridge Clothing Company Limited (CCCL) a foreign corporation formed in New Zealand and later expanding its business to Australia. It was CCCL which made the Agreement with its then employed Australian retail employees. In around 2016, CCCL restructured its operations and renamed the entity to Cambridge Lane Property Limited. As part of this restructure, Cambridge Clothing Limited (CCL) was established as the New Zealand operating entity and CCPL was established as the Australian operating entity.
As part of the restructure, several Australian employees covered by the Agreement “transferred” employment from CCCL to CCPL. These employees were transferring employees within the meaning of s 311(2) of the Act. There was a relevant connection between CCCL and CCPL for the purposes of s 311(1)(d) and (3) and so there was a transfer of business from CCCL to CCPL. The Agreement was a transferable instrument within the meaning of s 312(1) and CCPL and the transferring employees became covered by the Agreement in relation to the transferring work by operation of s 313. Because the General Retail Industry Award 2010 and later the General Retail Industry Award 2020 (Retail Award) covered CCPL and any non-transferring retail employees employed by CCPL since the transfer of business in relation to the transferring work, the Agreement would not in the normal course of events cover CCPL and the non-transferring employees in relation to that work (see s 314(1)). However, by order of the Commission dated 2 September 2016[1] made under s 319(3) the Agreement also covers non-transferring employees of CCPL performing the transferring work.
Subdivision D of Division 7 of Part 2-4 of the Act relevantly provides 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 Terminating an enterprise agreement after its nominal expiry date
(1)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 the continued operation of the agreement would be unfair for the employees covered by the agreement; or
(b) the FWC is satisfied that the agreement does not, and is not likely to, cover any employees; or
(c) all of the following apply:
(i)the FWC is satisfied that the continued operation of the enterprise agreement would pose a significant threat to the viability of a business carried on by the employer, or employers, covered by the agreement;
(ii)the FWC is satisfied that the termination of the enterprise agreement would be likely to reduce the potential of terminations of employment covered by subsection (2) for the employees covered by the agreement;
(iii)if the agreement contains terms providing entitlements relating to the termination of employees’ employment--each employer covered by the agreement has given the FWC a guarantee of termination entitlements in relation to the termination of the agreement.
(1A)However, the FWC must terminate the enterprise agreement under subsection (1) only if the FWC is satisfied that it is appropriate in all the circumstances to do so.
(2)This subsection covers a termination of the employment of an employee:
(a)at the employer’s initiative because the employer no longer requires the job done by the employee to be done by anyone, except where this is due to the ordinary and customary turnover of labour; or
(b)because of the insolvency or bankruptcy of the employer.
(3)In deciding whether to terminate the agreement, the FWC must consider the views of the following covered by the agreement:
(a)the employees (unless there are no employees covered by the agreement);
(b)each employer;
(c)each employee organisation (if any).
Note: The President may be required to direct a Full Bench to perform a function or exercise a power in relation to the matter if any of the employers, employees, or employee organisations, covered by the agreement oppose the termination (see subsection 615A(3)).
(4)In deciding whether to terminate the agreement (the existing agreement), the FWC must have regard to:
(a)whether the application was made at or after the notification time for a proposed enterprise agreement that will cover the same, or substantially the same, group of employees as the existing agreement; and
(b)whether bargaining for the proposed enterprise agreement is occurring; and
(c)whether the termination of the existing agreement would adversely affect the bargaining position of the employees that will be covered by the proposed enterprise agreement.
(5)In deciding whether to terminate the agreement, the FWC may also have regard to any other relevant matter.
…
227 When termination comes into operation
If an enterprise agreement is terminated under section 226, the termination operates from the day specified in the decision to terminate the agreement.
A declaration of David Willet, the Managing Director of CCPL made on 26 May 2023 in support of CCPL’s application sets out that:
(a) The Agreement has passed its nominal expiry date;
(b) At the date of the application the Agreement covered 43 full-time employees, 39 part-time employees and 83 casual employees;
(c) If the Agreement is terminated, the employees that were covered by the Agreement will be covered by the Retail Award;
(d) The application to terminate the Agreement is made pursuant to s 226(1)(a) of the Act, on the basis that the continued operation of the Agreement would be unfair to the employees it covers as the employees are considered better off under the Retail Award;
(e) From 8 April 2019 onwards CCPL did not apply the Agreement to Retail Employees, as classified in Schedule 1 of the Agreement and mistakenly applied the Retail Award.
The Agreement covers retail employees employed by CCCL who perform work in Australia in the classifications set out in the Agreement. On 9 June 2023 I held a case management conference after which I made directions for CCPL to serve a copy of the memo and comparison table between the Agreement and the Retail Award CCPL had emailed to employees on 18 May 2023 on any employee(s) employed since that date and to serve a copy of the directions on all employees. CCPL was also to provide a list of all employees covered by the Agreement and their contact details so that my chambers could communicate directly with them and give any employee an opportunity to provide their views on the application.
A statement was sent from my chambers to employees on 19 June 2023 providing an opportunity for each employee to tell me whether they opposed the application or to express their views otherwise. No responses were received, and I accept that there is no evidence of opposition or objection to the termination of the Agreement by any employee covered by the Agreement.[2]
Clause 13 of the Agreement provides for an all-inclusive base rate of pay for all ordinary hours of work, which includes all penalties, allowances and any other payments that might otherwise apply, except for those specifically included in the Agreement (Loaded Rate) and the rates of pay under the Retail Award are greater than the Agreement Loaded Rate.[3] Additionally, CCPL rely on penalty rates, overtime rates/time off in lieu and other entitlements being greater under the Award or under individual employment contracts than the Agreement.[4] In these circumstances, CCPL submit, and I accept, that it would be unfair for the employees to continue to be covered by the Agreement.
In the circumstances, as none of the persons mention in s 615A(3)(b) of the Act oppose the termination, s 615A(3) is not engaged. I am also satisfied that CCPL’s application has not been made after the notification time for a proposed enterprise agreement that will cover the same, or substantially the same, group of employees as the existing agreement; that no bargaining for such a proposed enterprise agreement is occurring; and that no employees covered by the Agreement would have their bargaining position for any proposed enterprise agreement adversely effected by the termination of the Agreement.[5]
There are no other relevant matters of which I am aware which ought to be considered.
Having regard to all the circumstances, including as set out in the application, the declarations and submissions filed, I consider that it is appropriate to terminate the Agreement.
In accordance with s 227 of the Act the termination of the Agreement operates from 24 July 2023.
DEPUTY PRESIDENT
[1] Cambridge Clothing Pty Ltd PR584727
[2] Applicant’s outline of submissions dated 13 July 2023 at [30]
[3] Ibid at [21] – [28]
[4] Ibid
[5] Ibid at [31]
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