Carl Zeiss Vision Australia Holdings Limited

[2017] FWCA 5825

[2017] FWCA 5825

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
Section 222 - Application for approval of a termination of an enterprise agreement

Carl Zeiss Vision Australia Holdings Limited
(AG2017/3688)

CARL ZEISS VISION AUSTRALIA EMPLOYEES WORKPLACE AGREEMENT

Manufacturing and associated industries
DEPUTY PRESIDENT ANDERSON	ADELAIDE, 9 NOVEMBER 2017

Application for termination of the Carl Zeiss Vision Australia Employees Workplace Agreement – termination agreed by majority vote – approval opposed by union covered by Agreement – information provided to employees not misleading – reasonable opportunity to decide – proposed change of employer relevant consideration - history of collective bargaining between parties- statutory scheme for collective bargaining – termination approved

[1] On 21 August 2017 an employer, Carl Zeiss Vision Australia Holdings Ltd applied to the Fair Work Commission (the Commission) for termination of the Carl Zeiss Vision Australia Employees Workplace Agreement (the Agreement) under section 222 of the Fair Work Act 2009 (the FW Act).

[2] The Agreement is a single enterprise agreement. It covers the work of manufacturing and clerical employees engaged in ophthalmic lens manufacturing and processing. Although the employer operates in three States (South Australia, New South Wales and Queensland) this Agreement only applies in South Australia.

[3] The Agreement was made on 27 May 2013 and approved by the Commission on 6 June 2013. 1 It operated from 14 June 2013, and was preceded by a prior collective agreement made in 2010. It passed its nominal expiry date on 2 April 2017 and, since then, has continued to operate by force of law.

[4] An industrial organisation, United Voice, was a bargaining representative for employees under the Agreement when it was made in 2013, and is covered by it.

[5] The applicant employer is entitled to apply for the termination of the Agreement under section 222 of the FW Act. That sections deals with circumstances where termination of an Agreement is sought on the basis that termination has been agreed to. The applicant says that a majority of employees have agreed to terminate the Agreement in accordance with the provisions of the Act.

[6] On 24 August 2017 I issued Directions requiring the applicant employer to provide all employees covered by the Agreement notice of the application and the proposed hearing date. 2 The employer complied with this direction.3

[7] On 24 August 2017 United Voice notified the Commission that it opposed the application and wished to be heard on it.

[8] I conducted a hearing of the matter on 28 September 2017. The employer and United Voice appeared and made submissions. In the interests of the efficient conduct of proceedings I granted permission under section 596 of the FW Act for the employer to be represented at the hearing by a lawyer, Ms Hii. The employer was also represented by its Human Resources, Safety and Claims Coordinator, Ms Kylie Bruce. United Voice was represented by an Industrial Officer, Mr Zammit. No other employee interests appeared.

[9] The employer’s application was accompanied by a Statutory Declaration from Ms Bruce dated 17 August 2017. That declaration was accompanied by a letter dated 24 July 2017 which the employer says it provided the relevant employees. In addition, a witness statement of Ms Bruce dated 27 September 2017 4 was relied upon.

[10] During the hearing I notified Ms Hii that I sought to ask Ms Bruce questions arising from her statutory declaration and witness statement. Ms Bruce gave oral evidence for that purpose and was cross examined by United Voice. At the conclusion of the hearing I reserved my decision and provided a timetable for the parties to file further written material on which they intended to rely.

[11] On 5 October 2017 the employer filed further evidence in the form of a witness statement from its Finance Manager Ms Esther Hamandishe, and a written submission. On 6 October 2017 United Voice lodged a written submission in opposition.

[12] The employer’s further evidence was accompanied by an application seeking orders that certain aspects of the evidence of Ms Hamandishe be confidential to the Commission and not provided to United Voice. I conducted directions hearings on 9 and 11 October 2017 on the confidentiality request. As a result, the employer was granted leave 5 to withdraw its application for confidentiality, withdraw the witness statement of Ms Hamandishe of 4 October and re-submit a revised witness statement of Ms Hamandishe of 9 October 2017. All material was provided to United Voice.

[13] Final written submissions were lodged by United Voice on 18 October 2017 and a final reply submission by the employer on 27 October 2017.

The Law

[14] This matter is to be determined in accordance with the provisions of sections 222 and 223 of the FW Act which state as follows:

“222 Application for FWA approval of a termination of an enterprise agreement

Application for approval

(1) If a termination of an enterprise agreement has been agreed to, a person covered by the agreement must apply to FWA for approval of the termination.

Material to accompany the application

(2) The application must be accompanied by any declarations that are required by the procedural rules to accompany the application.

When the application must be made

(3) The application must be made:

(a) within 14 days after the termination is agreed to; or

(b) if in all the circumstances FWA considers it fair to extend that period—within such further period as FWA allows.”

“223 When FWA must approve a termination of an enterprise agreement

If an application for the approval of a termination of an enterprise agreement is made under section 222, FWA must approve the termination if:

(a) FWA is satisfied that each employer covered by the agreement complied with subsection 220(2) (which deals with giving employees a reasonable opportunity to decide etc) in relation to the agreement; and

(b) FWA is satisfied that the termination was agreed to in accordance with whichever of subsection 221(1) or (2) applies (those subsections deal with agreement to the termination of different kinds of enterprise agreements by employee vote); and

(c) FWA is satisfied that there are no other reasonable grounds for believing that the employees have not agreed to the termination; and

(d) FWA considers that it is appropriate to approve the termination taking into account the views of the employee organisation or employee organisations (if any) covered by the agreement.”

[15] It is apparent from the application and the supporting materials that two consequences would arise for employees covered by the Agreement should its termination be approved by the Commission:

● Firstly, employees would have their wages and conditions covered by a common law contract underpinned by a modern award, rather than a collective agreement; and

● Secondly, employees would (if they accepted the proposed common law contract) be employed by a different legal entity, the parent company Carl Zeiss Pty Ltd.

Employer Submissions

[16] The grounds on which the employer seeks termination of the Agreement are as follows:

1. Efficiency: the employer says that only 18 employees remain employed under the Agreement out of a total workforce of approximately 250 persons in Australia. It contends that its management of workplace relations will be made more efficient if all manufacturing and clerical employees were employed on a consistent basis and by the same employer; and

2. Improved conditions: the employer says that conditions of employment proposed once the Agreement is terminated would be equal to or better than the Agreement.

[17] In support of these contentions the employer says that during the period since the Agreement was made new employees in the manufacturing and clerical side of its business (“cut, edge and fit”) have been employed by a parent company Carl Zeiss Pty Ltd rather than the employer bound by the Agreement (Carl Zeiss Vision Australia Holdings Ltd). This occurred as a result of business restructuring approximately three years ago. 6 It has resulted in only 18 employees remaining covered by the Agreement at the time the application was made.7

[18] The employer contends that it would be administratively more efficient for all employees in the manufacturing and clerical side of the business (about 45 in total 8) to be employed by a common employer rather than a small number continuing to be employed by a different employer under a different industrial instrument (the Agreement).

[19] The intended employer for all manufacturing and clerical employees (Carl Zeiss Pty Ltd) does not employ persons under an enterprise agreement. The instrument under which it employs manufacturing and clerical employees are common law contracts underpinned by modern awards made by the Commission, being the Manufacturing and Associated Industries and Occupations Award 2010 and the Clerks Private Sector Award 2010. Thus, should the Agreement be terminated, the employer proposes that the Agreement employees be employed on an individual common law contract (letter of offer) underpinned by the relevant modern award (Manufacturing and Associated Industries and Occupations Award 2010 or Clerks Private Sector Award 2010, as applicable).

[20] The employer’s evidence 9 and submission is that currently all the labour and associated costs relating to the 18 employees under the Agreement (and employed by Carl Zeiss Vision Australia Holdings Ltd) must be individually cross-charged to the corporate entity that now undertakes its manufacturing operations (Carl Zeiss Pty Ltd) which creates “a significant and unnecessary administrative inconvenience”.10

[21] In addition, the statutory declaration and witness statement of Ms Bruce deposes that:

● On 25 July 2017 employees covered by the Agreement were provided written materials by the employer concerning the proposal to terminate the Agreement and given eight days in which to ask questions or seek further information;
● On 3 August 2017 voting by secret ballot of employees commenced, and closed on 11 August;
● The results of the ballot were announced on 14 August. Of the 18 employees eligible to vote, a majority (11) voted in favour. Seven voted against. 11

[22] Ms Bruce’s evidence was that the information sent to employees on 25 July included a draft of the letter of offer employees would be provided should the Agreement be terminated and a chart (‘the comparative chart’) comparing the terms of the existing Agreement with the terms of the underpinning Award(s) and with a summary (prepared by the employer) of the “Effect on Employees”. This material was provided to the employees, and to United Voice. Her evidence was, based on the contents of the comparative chart, that employees would have better terms and conditions of employment under the proposed post-Agreement arrangements.

[23] The employer asserts that the Agreement must be terminated as the criteria in sections 222 and 223 of the FW Act are said to have been met.

Union Submissions

[24] United Voice opposed the application on two principal grounds: firstly, that the employees were not given a reasonable opportunity to decide whether they wanted to approve the proposed termination (section 223(a)); and secondly, that it is not appropriate to do so (section 223(b)).

[25] With respect to section 223(a), United Voice contended that no reasonable opportunity was provided to employees because the information provided by the employer was misleading in that it did not explain what is said to be potential detriments to employees should the Agreement be terminated.

[26] With respect to section 223(b), United Voice contended that it is not appropriate to terminate the Agreement having regard to the history of collective agreements covering the employees over the past 20 years and the fact that termination is proposed before any employees have accepted the letters of offer proposed by the current employer which would see them employed by a new corporate entity.

[27] In addition, United Voice contests certain claims made by the employer about the beneficial effect of the termination of the Agreement on employees.

[28] Beyond making oral and written submissions, United Voice did not lead evidence in the matter.

[29] Having regard to the statutory provisions, the two principal considerations I must deal with are: whether the termination has been agreed by the employees in accordance with the requirements of the Act; and whether “it is appropriate to approve the termination” after taking into account, in this instance, the views of United Voice.

Consideration

[30] It was not contested that of the 18 12 employees under the Agreement, about 15 are manufacturing employees and about 3 are clerical employees. Nor was it contested that the employer provided information to employees about the proposed termination of the Agreement on 25 July, and that eight days later (on 3 August) a vote of employees was held by secret ballot. The results of the ballot were that of the 18 votes, 11 voted to terminate the agreement and 7 opposed.

[31] I now deal with each of the relevant statutory provisions and in so doing address the submissions of the employer and those of United Voice.

Section 222(1) Application for approval

[32] The application has been made by Carl Zeiss Vision Australia Holdings Ltd. This entity is the current employer of employees covered by the Agreement. It is a party to the Agreement. It has standing to make the application, and has done so. Section 222(1) has been complied with.

Section 222(2) Material to accompany application

[33] As required by rule 26 of the Fair Work Commission Rules 2013, the application has been accompanied by a statutory declaration in the approved form by an officer or authorised employee of the applicant setting out the basis on which the Commission can be satisfied that the requirements of section 223 of the FW Act have been met. Section 222(2) has been complied with.

Section 222(3) When application must be made

[34] The application was made on 21 August 2017. The termination was agreed to on 14 August 2017. The application has been made within 14 days after the termination was agreed. Section 222(3) has been complied with.

Sections 223(b) and (c) Agreement by employees

[35] Under section 221(1) of the FW Act the termination of an Agreement is agreed to when a majority of the employees who cast a valid vote approve the termination. On the facts before me, I am satisfied that a majority of employees voted in favour of termination by way of secret ballot by the time the ballot closed on 11 August 2017, and that there are no other reasonable grounds for believing that the termination was not agreed in this way and by that time. Sections 223(b) and (c) have been complied with.

Section 223(a) Reasonable opportunity to decide

[36] Section 220(2) of the FW Act provides that before making a request that its employees approve the termination, an employer must:

“(a)  take all reasonable steps to notify the employees of the following:

(i) the time and place at which the vote will occur;

(ii) the voting method that will be used; and

(b) give the employees a reasonable opportunity to decide whether they want to approve the proposed termination.”

[37] On the material before me, I am satisfied that the employer complied with the formal requirements of this provision in terms of notifying employees of the logistics for casting a vote by secret ballot and providing a reasonable time frame for doing so. That all employees voted is strong evidence of that fact.

[38] However, United Voice contends that section 220(b) (and thereby section 223(a)) requires compliance with more than logistical timeframes and requirements for approval but rather an objective test of reasonableness. It says that this test of reasonableness is not made out because the information provided by the employer was misleading in that it did not explain what it claims are potential detriments to employees should the Agreement be terminated.

[39] From a statutory construction point of view the subject of section 223(a) is the reasonableness of the opportunity to decide not the reasonableness of the employer’s conduct at large. The Explanatory Memorandum to the Fair Work Bill 2009 indicates by way of example that this provision may involve the employer “allowing employees sufficient time between making the request and the time of the vote to consider the effect of the termination on their terms and conditions”. 13 Section 223(a) lends itself to a view that issues relevant under section 223(a) are concerned with the reasonableness of the logistics and process for decision-making and voting rather than the substantive content of material being considered.

[40] Although that narrower construction is one I prefer, some decisions of the Commission have adopted a broader construction suggesting that “the lack of any explanation or misleading or incorrect explanations may well be a factor in a consideration as to whether there has been a reasonable opportunity.” 14

[41] In any event, I do not need to determine whether the claim by United Voice that some of the employer’s material was misleading falls strictly within the expression “reasonable opportunity to decide” under section 223(a) because it would (if not relevant under 223(a)) be relevant in the catch-all under section 223(d) which requires the Commission to consider whether termination “is appropriate”.

[42] As those issues have been raised by United Voice under 223(a) I deal with them now and also consider them relevant to my consideration under 223(d).

Access to Future Wage Increases

[43] United Voice contends that the employer information is misleading because whilst it claims that the terms and conditions of employees will be at least equal to the same provided for in the Agreement, that there is no guarantee that salaries will be increased at future salary reviews and no collective mechanism for salary negotiation that a collective agreement provides.

[44] I do not agree. The terms of employment under the proposed common law contract (letter of offer) provide as follows:

“Your salary will be reviewed again in October 2017 and annually thereafter. Salary reviews will be assessed on both individual performance and company performance.”

[45] The Agreement provided for increased salaries from 1 April 2013 but did not otherwise require an increase in salaries or provide a specific mechanism for future collective or individual negotiation. There was no guarantee of a salary increase under the Agreement beyond 1 April 2013, either during its life or beyond its nominal expiry date. The Agreement Renewal clause (clause 46) makes no such reference.

[46] The evidence of Ms Bruce is that under the proposed arrangements a decision on whether a general increase would occur (and at what level) would be made at a central level in about October of each year, and that this could then be supplemented with individual-by-individual performance based considerations. 15 The employer information communicated to employees reflected this position. Nor was it misleading to say that these arrangements are “at least equal to the same provided for in the Agreement”.

Personal Leave

[47] United Voice contends that the employer information is misleading because whilst it claims that the terms and conditions of employees will be at least equal to the same provided for in the Agreement, the accrual of personal or carers leave under the Agreement is more favourable to employees.

[48] I do not agree. The employer’s material supplied to employees (Schedule 1 – Comparison Chart) claimed “similar provisions in both the Agreement and letter of offer”. It did not claim they were identical. It set out, in summary form, the Agreement provision indicating that leave “accumulates progressively during a year of service”. It set out, in summary form, the NES (award) provision by indicating “10 days paid leave per year of service.” The employer’s material did not make a specific claim in its summary chart about the way personal leave would accrue under the award (NES) and common law contract (letter of offer). While its information on this point could have been more specific, I do not consider that it was misleading. An employee was accurately informed of the annual quantum of personal leave entitlement. It would have been open to an employee to seek further information on accrual provisions based on the material supplied, if they wished to do so. In any event, the Award provision is not less beneficial to employees with regard to accumulation or quantum of leave.

Span of Ordinary Hours

[49] United Voice contends that the employer information is misleading because whilst it claims that the terms and conditions of employees will be at least equal to the same provided for in the Agreement, the span of ordinary hours under the award and common law contract (letter of offer) differ from the Agreement in respect to weekend work.

[50] The employer’s material supplied to employees (Schedule 1 – Comparison Chart) sets out the span of ordinary hours under the Agreement (6am to 7pm Monday to Friday) and the Award/common law contract (6am to 6pm Monday to Friday and weekends “by agreement”). It then claims:

“Employees are better off than the Workplace Agreement with the span of ordinary hours. Ordinary hours may include weekends but only by agreement.”

[51] I am satisfied that these claims made by the employer in its material were a fair summary of the comparative position, and not misleading. In one respect the award/common law contract provision is more favourable to employees (the span of ordinary hours finishes at 6pm not 7pm) but in another it is (arguably) less favourable (ordinary hours can be worked on weekends by agreement). It was only in respect of the span of ordinary hours that the employer asserted that employees are better off.

[52] These claims are not misleading.

Part time Minimum Hours

[53] United Voice contends that the employer information is misleading because whilst it claims that the terms and conditions of employees will be at least equal to the same provided for in the Agreement, the Agreement provides for a minimum weekly engagement of 19 hours for a part time employee whereas the Award/common law contract has no weekly minimum just a minimum of 3 hours per shift.

[54] The employer’s material supplied to employees (Schedule 1 – Comparison Chart) claims as follows:

“Employees are better off than under the Workplace Agreement. There is no entitlement of a minimum of 19 hours per week, however there is more certainty in when work is to be performed.”

[55] The context of this claim is that that it follows the employer saying that while there is no minimum number of hours per week under its proposal, “Employees are guaranteed in writing the hours to be worked each week, the days on which they will be worked and the commencing and finishing times for the work.”

[56] The evidence of Ms Bruce and also the employer submission contended that under the award and letter of offer arrangement the employee “must be guaranteed a regular pattern of work.” 16 It is not clear however, on the material before me, where the employer sources this proposed claim concerning written guarantee of rosters in advance. Clause 36 of the Manufacturing Award contemplates agreements on working hours but does not provide a specific obligation of written notice in advance. Nor does the common law contract (letter of offer).

[57] Although I do not consider the employer’s information provided to employees on this point to be misleading, it is ambiguous and arguably incomplete without a fuller understanding of how rosters are currently communicated and would be communicated in the future. I do not however consider that the claim in the employer’s material, in the form provided, denied employees an opportunity to seek clarification of this matter in the lead up to exercising their vote. I also take into account the evidence of Ms Bruce 17 that currently the employer does not employ any part time employees in its manufacturing operation. It cannot be said that on this point the information was so insufficient that the employees did not know what they were voting for.18

Payment of Wages

[58] The employer’s material supplied to employees (Schedule 1 – Comparison Chart) states that under the existing Agreement wages are paid by EFT “by Wednesday of the pay week” whereas under the proposed arrangements wages will be paid by EFT “fortnightly for the first 12 months then monthly ongoing.”

[59] United Voice contends that the employer information is misleading because whilst it claims that the terms and conditions of employees will be at least equal to the same provided for in the Agreement, employees are not “equal by comparison” when it comes to the frequency of payment of wages. In particular it says that monthly pay (under the award/letter of offer) is not “equal by comparison” to weekly pay under the Agreement.

[60] I consider this a fair criticism of the employer’s comparative chart. Although the evidence of Ms Bruce 19 is that some of the relevant employees have sought monthly pay cycles in preference to weekly or fortnightly, they do not have equal impacts. Viewed objectively, this is an incorrect statement. I do not, however, consider it to be of sufficient magnitude to taint the comparative chart as a whole, or the employer material distributed to employees. There is no evidence before me to suggest that employees were confused by this issue. The comparative chart made it clear that weekly pay would be substituted by a transition to fortnightly and then monthly pay if the award/letter of offer arrangements were to apply. Employees were put on notice that the employer proposed to move to monthly pay after 12 months should the new arrangements be put in place.

[61] I am satisfied that employees knew that a consequence of voting to terminate the Agreement would be a transitional move to monthly pay.

[62] In considering whether the employer’s material was misleading or incomplete so as to deny an employee from having a “reasonable opportunity” to decide their position or whether it is “appropriate” to approve the termination I also take into account the employer’s material provided to employees as a whole. This includes the fact that the comparison charts (in schedule 1 of the employer’s material) are summaries of existing and proposed terms and conditions and do not purport to be a full transcription of those provisions. It is obvious to a reader that they are a paraphrase of each category of workplace benefit in summary form only.

[63] I also take into account that in certain categories the employer has expressly claimed in the column “Effect on Employees” that employees are (at least technically) “worse off under the award” (see for example, ‘Mixed functions/Higher duties’ re clerks and ‘Juniors’ re manufacturing workers and clerks) but then proceeded to explain (in summary form) why that is not the case in practice. These explanations are consistent with the evidence of Ms Bruce 20 (that no juniors are currently employed, and that employees are placed on higher duties only “very, very occasionally”). The employer has not conveyed a misleading impression or concealed the existence of a lesser benefit or entitlement.

[64] For the above reasons, I am not satisfied that the material provided by the employer to employees was of such a character or so deficient that it denied a reasonable opportunity under section 223(a) of the FW Act for employees to decide their position on the request to approve the termination of the Agreement nor does it render the termination inappropriate under section 223(d).

Section 223(d) Appropriate to approve the termination

[65] There are a number of further grounds on which United Voice contend that it is not appropriate to approve the termination under section 223(d). I now deal with each of these.

The Change of Employer

[66] United Voice contends that employees were not adequately informed nor adequately protected by the proposal to change the legal status of their employer as a consequence of approving the termination of the Agreement.

[67] In support of this submission United Voice draws attention to the fact that the covering letter sent to employees as part of the employer’s material did not directly state this, nor did the comparative chart. Rather, the covering letter said, in part:

“your approval to terminate the EA by consent…will enable CZVH to have its employees employed under a letter of offer (to be read in conjunction with the relevant modern award) that provides consistent terms and conditions of employment (where applicable) across the organisation.” 21

[68] However, I find that the covering letter also attached the “Proposed Letter of Offer” and that attachment says, in its opening sentence:

“As discussed, I am pleased to confirm your transfer of employment from Carl Zeiss Vision Australia Holdings Ltd (CZVH) to Carl Zeiss Pty Ltd (the Company).” 22

[69] Given such clear and prominent communication, together with the evidence of Ms Bruce 23 that this was outlined to employees, I am satisfied on the evidence before me that the employer transparently disclosed to employees that a consequence of the termination of the Agreement would be the issuing of a letter of offer that, if accepted, would transfer employment from Carl Zeiss Vision Australia Holdings Ltd to another company in the same group Carl Zeiss Pty Ltd.

[70] That does not however dispose of the issue. During proceedings I invited the parties to provide evidence or make submissions on the status of the proposed new employer and whether the nature of that entity bore on the issue of whether it would be appropriate to approve the termination of the Agreement under section 223(d).

[71] The evidence of Ms Hamandishe 24 is to the effect that:

● Carl Zeiss Pty Ltd (the proposed employer) is the current employer of 185 employees in Australia;

● Carl Zeiss Pty Ltd has operated in Australia for 56 years;

● Carl Zeiss Pty Ltd has no plans to downsize its current operation and maintains a stable financial position;

● Carl Zeiss Pty Ltd is the parent company of and wholly owns Carl Zeiss Vision Australia Holdings Ltd (the current employer); and

● Both Carl Zeiss Pty Ltd and Carl Zeiss Vision Australia Holdings Ltd are owned by the global parent company Carl Zeiss AG, based in Germany.

[72] These facts were not, in a material sense, contested by United Voice.

[73] It is to be noted however, that the employer cannot compel an employee to accept the letter of offer (and consequently the change of their employer). The consequence of the Agreement being terminated is that a letter of offer will be issued. The employer cannot control or predict an individual’s response. The evidence before me from Ms Bruce is that some of the relevant employees have made inquiries about accepting the letter of offer, but have been informed that the company is “unable to move forward at all until a decision has been decided through the Commission.” 25 Her evidence is that none have expressed concern at the proposed change of employer. In the event of the Agreement being terminated but an employee then not agreeing to the letter of offer, that employee’s terms and conditions would be governed by the relevant modern Award overlaid by any existing contractual provisions. The company evidence26 and submission is, should that situation arise, the employer would seek to discuss with the individual employee their specific concerns about the letter of offer.

[74] On the basis of the evidence and submissions before me I am satisfied that there is no particular disadvantage or detriment arising from the proposed change from the existing employer that would render it inappropriate to terminate the existing Agreement.

History of Collective Bargaining between the Parties

[75] United Voice contends that it is inappropriate to terminate the Agreement in circumstances where, given a history of collective bargaining between the parties, the employees would cease to be governed by a collective agreement and a replacement collective agreement is not proposed by the employer.

[76] United Voice did not lead evidence of the history of collective bargaining between this employer and its employees, nor did it lead evidence whether it has current membership of employees under the Agreement or would expect to be authorised to act as a bargaining representative of employees were a new collective agreement re-negotiated. However, it submitted that collective bargaining has occurred in this enterprise for 20 years.

[77] While I have not been apprised of the full history of collective bargaining between this employer and its employees, I do have evidence that the Agreement is a multi-generational agreement, and was preceded by at least one collective agreement made in 2010 which covered United Voice. These are relevant factors for the Commission to take into account in considering whether termination is appropriate under section 223(d). However, also relevant is the fact that a collective of employees (by majority) has now made an informed decision to no longer have their employment governed by a collective agreement.

[78] Also relevant are the provisions of the Agreement concerning ‘Agreement Renewal’. Clause 46 expresses an intention to commence renegotiation for a further workplace agreement in the months prior to the expiry of the Agreement, and that if a new agreement is not made then the existing Agreement “will continue in force until superseded or rescinded.” This provision is expressed to operate “without limiting the statutory rights of the parties”. 27

[79] There is no evidence before me from either the applicant employer or United Voice as to whether the intended renegotiation prior to the Agreement’s nominal expiry occurred. The evidence of Ms Bruce is that the employer communicated with United Voice prior to the expiry of the Agreement and advised that the employer was weighing its options. The decision of the employer was subsequently made to not renegotiate a new agreement but to terminate the existing agreement on the ground that only 18 employees remained under the Agreement. This decision was communicated to United Voice, as were the communications to employees. United Voice attended the enterprise on 31 July 2017 in the lead-up to the vote and met with employees who wished to do so. 28

[80] I find that the employer gave consideration to the merits of renegotiating a new collective agreement and made a considered decision not to do so. Its reasons were primarily based on its administrative convenience given that new manufacturing employees had (in the preceding three years) not been employed under the Agreement and that the number of employees under the Agreement had fallen to 18. I also find that this decision had been communicated, in general terms, to United Voice. I do not find that the applicant employer made a decision to not renegotiate a collective agreement as a consequence of any desire on its part to abandon a collective instrument in favour of an individual instrument as a matter of principle. It was motivated by what it considered to be practical and administratively convenient.

[81] The issue which arises is whether, in these circumstances, it is appropriate to terminate the Agreement where that termination has been agreed by the employer and a collective of employees (by majority) but is opposed by the union that is covered by the Agreement.

[82] Relevant to the submission of United Voice are the objects of the FW Act and in particular sections 3 and 171:

“3  Object of this Act
                   The object of this Act is to provide a balanced framework for cooperative and productive workplace relations that promotes national economic prosperity and social inclusion for all Australians by:
   (a)  providing workplace relations laws that are fair to working Australians, are flexible for businesses, promote productivity and economic growth for Australia’s future economic prosperity and take into account Australia’s international labour obligations; and
   (b)  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; and
   (c)  ensuring that the guaranteed safety net of fair, relevant and enforceable minimum wages and conditions can no longer be undermined by the making of statutory individual employment agreements of any kind given that such agreements can never be part of a fair workplace relations system; and
   (d)  assisting employees to balance their work and family responsibilities by providing for flexible working arrangements; and
   (e)  enabling fairness and representation at work and the prevention of discrimination by recognising the right to freedom of association and the right to be represented, protecting against unfair treatment and discrimination, providing accessible and effective procedures to resolve grievances and disputes and providing effective compliance mechanisms; and
   (f)  achieving productivity and fairness through an emphasis on enterprise-level collective bargaining underpinned by simple good faith bargaining obligations and clear rules governing industrial action; and
   (g)  acknowledging the special circumstances of small and medium-sized businesses.”

“171  Objects of this Part
                   The objects of this Part are:
   (a)  to provide a simple, flexible and fair framework that enables collective bargaining in good faith, particularly at the enterprise level, for enterprise agreements that deliver productivity benefits; and
   (b)  to enable the FWC to facilitate good faith bargaining and the making of enterprise agreements, including through:
   (i)  making bargaining orders; and
   (ii)  dealing with disputes where the bargaining representatives request assistance; and
   (iii)  ensuring that applications to the FWC for approval of enterprise agreements are dealt with without delay.”

[83] I do not consider these objects to create a statutory presumption against termination of a collective agreement. While the FW Act expresses the objective of promoting collective bargaining in good faith at the enterprise level, those objectives are then reflected in a detailed statutory scheme which (without being exhaustive) imposes both rights and obligations concerning the negotiation of agreements, the content of agreements, the approval of agreements by the Commission, the continued operation of agreements beyond their nominal expiry date, and the termination of agreements (also by Commission approval). In relation to termination of single enterprise agreements, the statutory scheme expressly provides for termination by consent of the employer and employees (section 222, as in this instance) or on application by one of the parties (section 225).

[84] Further, the tests governing the exercise of the Commission’s discretion differ between consent and contested applications. A more rigorous test (including the public interest) applies to section 225 (contested) applications. While the views of objecting parties are relevant and must be considered (for example, in deciding whether termination is appropriate), the scheme of sections 222 and 223 (consent applications) places weight on the existence of agreement and the facts surrounding the expression of that agreement.

[85] In considering the statutory scheme relevant to the termination of agreements a Full Bench of this Commission in Re Aurizon Operations Ltd said as follows:

“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.” 29

[86] The Full Bench went on to observe that “there is nothing inherently inconsistent with the termination of an enterprise agreement that has passed its nominal expiry date and collective bargaining in good faith.” 30 Although made in the context of a section 225 application, I consider these observations to also be pertinent to the statutory scheme governing section 222 applications.

[87] United Voice has not led evidence that would support a conclusion that it is not appropriate in the particular circumstances of this enterprise to continue to regulate wages and conditions by collective bargaining rather than by other lawful instruments of regulation (including modern awards which have collective effect).

[88] I am satisfied that it is appropriate to approve the termination notwithstanding the views of United Voice. I do not consider there to be a statutory bar to doing so or a statutory presumption against doing so. The statutory requirements have been met. Persons bound by the Agreement have, by majority, agreed to terminate it. There are no reasonable grounds for believing that the employees have not so agreed. The Commission approves the termination.

[89] Under section 224 of the FW Act a termination operates from the day specified in the decision to terminate the agreement. No date has been specified by the employer or employees. I consider it appropriate for a short period to be provided before the termination comes into effect to enable the employer to issue the proposed letter of offer to the employees and for the employees to communicate their response to the employer. I also take into account the fact that a considerable period of time has elapsed since the employees voted to terminate the agreement on 14 August. In all the circumstances, I consider 21 days from today’s date to be a reasonable time. The termination of the Carl Zeiss Vision Australia Employees Workplace Agreement will operate from 30 November 2017. I publish an Order to this effect.

DEPUTY PRESIDENT

 1   [2013] FWCA 3548 Senior Deputy President O’Callaghan, 6 June 2013

 2   Directions, Deputy President Anderson 24 August 2017

 3   Employer’s representative email to Chambers 29 August 2017

 4   Exhibit R1

 5   Directions, 11 October 2017 Deputy President Anderson

 6   Evidence of Kylie Bruce PN 164-165

 7   Evidence of Kylie Bruce PN 143, PN 156-158

 8   Witness Statement of Esther Hamandishe at paragraph 9

 9   Evidence of Kylie Bruce PN 163

 10   Applicant’s Outline of Submissions (undated) at paragraph 37

 11   Employer submissions PN 44-45

 12   18 employees at the time the application was made; the evidence of Ms Hamandishe is that by 9 October 2017 this number had reduced to 17 (Witness Statement of Esther Hamandishe at paragraph 9)

 13   Explanatory Memorandum Fair Work Bill 2009 at [932]

 14   Barminco (Mt Lyell) Greenfields Agreement [2015] FWCA 219 at [20] per Commissioner Lee cited with approval by Deputy President Kovacic in Advanced Plumbing and Drains [2015] FWCA 8740 at [26]

 15   Evidence of Kylie Bruce PN 211-212

 16   Evidence of Kylie Bruce PN 254; Applicant’s Outline of Submissions (undated) at paragraph 21.3

 17   Evidence of Kylie Bruce PN 218

 18   Advanced Plumbing and Drains [2015] FWCA 8740

 19   Evidence of Kylie Bruce PN 163

 20   Evidence of Kylie Bruce PN 192-194; PN 189

 21   Attachment to Statutory Declaration of Kylie Bruce (letter from Zeiss dated 24 July 2017)

 22   Attachment to Statutory Declaration of Kylie Bruce (proposed letter of offer dated 24 July 2017)

 23   Evidence of Kylie Bruce PN 221

 24   Witness Statement of Esther Hamandishe at paragraphs 9, 10, 12, 13, 14 and 15

 25   Evidence of Kylie Bruce PN 215

 26   Evidence of Kylie Bruce PN 222-226; PN 269

 27   Clause 46, Carl Zeiss Vision Australia Employees Workplace Agreement 2013

 28   Evidence of Kylie Bruce PN 170-178; Witness Statement of Kylie Bruce 29 September 2017 at paragraph 18

 29   Re Aurizon Operations Ltd[2015] FWCFB 540 at [126]

 30   Ibid at [151]

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