Care Connect Limited

[2015] FWCA 2044

[2015] FWCA 2044

FAIR WORK COMMISSION

DECISION

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

Care Connect Limited
(AG2014/10773)

CARE CONNECT LIMITED COLLECTIVE EMPLOYEE AGREEMENT 2010

Health and welfare services
COMMISSIONER JOHNS	SYDNEY, 25 MARCH 2015

Application to terminate the Care Connect Limited Collective Enterprise Agreement 2010.

[1] This decision concerns an application by Care Connect Limited (Applicant/Employer) under section 225 of the Fair Work Act 2009 (FW Act) to terminate the Care Connect Limited Collective Enterprise Agreement 2010 (2010 Agreement). The nominal expiry date of the Agreement is 30 June 2013.

[2] The 2010 Agreement currently applies to senior managers (classification levels MG1, MG2 and MG3).

[3] Other employees previously covered by the 2010 Agreement are now covered by the Care Connect Limited Collective Enterprise Agreement 2013 (2013 Agreement). The Application for approval of the 2013 Agreement and the Application the subject of this decision were filed on 11 December 2014. The 2013 Agreement was approved on 22 December 2014. It commenced operation on 29 December 2014 and has a nominal expiry date of 30 June 2017. 1

[4] Because the 2010 Agreement covers senior managers, the Employer wants it terminated.

Legislative scheme

[5] Sections 225 and 226 of the Act provide:

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.

Consideration

Is termination of the Agreement contrary to the public interest?

[6] In Energy Resources of Australia Ltd v LHMU 2 his Honour Vice President Watson set out the relevant authorities relating to the public interest as follows:

[11] The public interest requirement in s 226(a) is expressed in similar terms to previous s 170MH(3) of the WR Act. That section was subject to consideration by a Full Bench of the AIRC on a number of occasions. Those authorities make it clear that the public interest involves something distinct from the interests of the parties although they may be similarly affected. In Re Kellogg Brown and Root Bass Strait (Esso) Onshore/Offshore Facilities Certified Agreement 2000 4 a Full Bench said (at [22-27]):

“[22] 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.

[23] 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.

[24] We were referred to a number of authorities concerning the ascertainment of the public interest. It is sufficient to refer to two. The first is the decision of the High Court of Australia in Queensland Electricity Commission; Ex parte Electrical Trades Union of Australia (the QEC case). In that case the Court was considering the exercise of the discretion conferred on the Conciliation and Arbitration Commission by s.41(1)(d)(iii) of the Conciliation and Arbitration Act 1904. A similar discretion is now conferred upon this Commission by s.111(1)(g)(iii) of the Act. That section reads:

"111 Particular powers of Commission

. . .

(1) The Commission may:

. . .

(g) dismiss a matter or part of a matter, or refrain from further hearing or from determining the industrial dispute or part of the industrial dispute, if it appears:

. . .

(iii) that further proceedings are not necessary or desirable in the public interest;"

[25] The QEC case was concerned with whether or not the Commission had failed to exercise its jurisdiction in upholding an application by the Queensland Electricity Commission to refrain from further hearing or from determining an industrial dispute between it and the Electrical Trades Union of Australia. The following passage appears in the joint judgement of the majority:

". . . Ascertainment in any particular case of where the public interest lies will often depend on a balancing of interests, including competing public interests, and be very much a question of fact and degree. In this case the Commission was called upon to weigh in the balance two competing public interests. One was the importance of settling in its entirety the dispute initiated by the E.T.U.'s log of claims. The other was the importance of leaving the dispute to be resolved by the State tribunal despite the limitations on its jurisdiction if that course was likely to maintain the marked improvement in industrial relations in the industry that had occurred since the dispute arose and thereby contribute to industrial peace and an efficient power supply.”

[26] It is clear from this passage that the ascertainment of the public interest may involve balancing countervailing public interests. That the Commission should take all of the circumstances into account is made clear by Dawson J in Re Australian Insurance Employees Union; Ex parte Academy Insurance Pty Ltd. These authorities provide useful general guidance in the application of the test in s.170MH(3). They illustrate the types of interests which can be properly described as public interests and confirm the breadth of circumstances which may be relevant to the ascertainment of those interests.

[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.”

(references omitted)

[7] The Applicant’s application for termination was supported by a statutory declaration from its Chief Executive Officer, Paul Ostrowski. Mr Ostrowski declared that termination of the 2010 Agreement would not be contrary to the public interest because:

a) The 2013 Agreement had been voted on, endorsed by a valid majority of employees, made and filed for approval with the Commission;

b) The 2013 Agreement will cover a all employees covered by the 2010 Agreement, excepting senior managers (classification levels MG1, MG2 and MG3 in the 2010 Agreement);

c) All senior managers employed by Care Connect were consulted on the coverage of the 2013 Agreement and agreed they would prefer to derive their entitlements from individual written employment agreements only, rather than being covered by the 2013 Agreement;

d) All senior managers employed by the Applicant have individual written employment agreements in place which confer their employment entitlements;

e) All of these individual written employment agreements provide for higher salary entitlements than the applicable salary entitlements in the 2010 Agreement;

f) The termination of the 2010 Agreement would therefore not be contrary to the public interest as the only employees covered by the Agreement are not deriving their salary entitlements from this instrument and are better off under their individual written employment agreements; and

g) Further, given the seniority of the positions held by the senior managers they are in a better position to negotiate their individual terms and conditions.

Is termination of the Agreement appropriate in the circumstances?

Views of the parties s.226(b)(i)

[8] The Commission is required to take into account the views of the parties in deciding whether to terminate the 2010 Agreement.

[9] The views of the employer were clear from the fact that it made the application to terminate.

[10] Nothing in the material filed by the applicant contained the views of the employees.

[11] On 10 February 2015, and again on 12 March 2015, the Commission wrote to the Applicant inviting it to provide the Commission with material which evidenced the views of all the employees currently covered by the 2010 Agreement. On 13 March 2015, the Applicant’s representative wrote to the Commission and asserted that:

a) The Applicant met with employees covered by classifications levels MG1, MG2 and MG3 contained in the 2010 Agreement in March 2013;

b) Following this meeting, on 5 March 2013, the Applicant wrote to the relevant employees seeking their views on ceasing to be covered by the 2010 Agreement and instead being covered by individual agreements;

c) The responses received indicated an overall preference to be covered by individual agreements and not the 2010 Agreement;

d) The employees to whom the Applicant sent the correspondence seeking views on this matter were at the relevant time the only employees in Management Classifications; and

e) The email responses attached were the only email responses the Applicant received in relation to this matter.

[12] The Commission was provided with copies of the employee responses. Each employee indicated either a preference for an individual contract or that they did not object to the same.

Views of employer

Likely effect of termination s.226(b)(ii)

[13] The Applicant in its statutory declaration stated that effect on the Employer of the termination of the Agreement would include the following:

a) Reduced regulatory burden on the Applicant;

b) Greater clarity for senior managers and Care Connect regarding the source of entitlements and obligations;

c) Greater clarity for all employees as only the 2013 Agreement will operate;

d) Promoting increased flexibility in relation to individual working arrangements and employment entitlements for senior managers.

e) Bringing the managers into line with usual market practice in that they are not within the categories of employees who would ordinarily be award or agreement covered, by nature of work/duties undertaken by them.

Conclusion

[14] The Commission, as presently constituted, having considered and being satisfied as to each of the matters contained in s.226 of the FW Act, the 2010 Agreement is terminated with effect from today.

COMMISSIONER

 1   [2014] FWCA 9395

 2   [2010] FWA 2434

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