Central Canberra Family Day Care Summary

[2024] FWCA 3989

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009

s.225—Enterprise agreement

Central Canberra Family Day Care

(AG2024/4149)

CENTRAL CANBERRA FAMILY DAY CARE ENTERPRISE AGREEMENT 2013

Children’s services
COMMISSIONER MCKINNON	SYDNEY, 18 NOVEMBER 2024

Application for termination of the Central Canberra Family Day Care Enterprise Agreement 2013

Central Canberra Family Day Care trading as Cubby House has applied to terminate the Central Canberra Family Day Care Enterprise Agreement 2013 (the Agreement) under section 225 of the Fair Work Act 2009 (the Act).

The Agreement was made in 2013 by Central Canberra Family Day Care (ABN 13 475 819 712) and its employees engaged as Children Services Workers. The Agreement was approved on 9 January 2014 and nominally expired on 9 January 2018.

Section 226 of the Act requires the Commission to terminate an enterprise agreement if the conditions in that section are met. Mandatory considerations apply in relation to the termination of an enterprise agreement under section 226. In this case, the application for termination of the Agreement is made under section 226(1)(c), which requires the Commission to terminate an enterprise agreement on application if three statutory conditions relating to business viability and reduced potential for termination of employment are met.

I am not satisfied that the conditions for termination of the Agreement are met or that it is appropriate in all the circumstances to terminate the Agreement. Accordingly, the application will be dismissed. These are my reasons.

Section 226(1)(c)

Section 226(1)(c) of the Act requires the Commission to terminate an expired enterprise agreement on application by a person covered by the agreement, but only if the conditions in s.226(1)(c) are met and it is appropriate in all the circumstances to do so. Relevantly, it provides as follows:

“(1) If an application for the termination of an enterprise agreement is made under section 225, the FWC must terminate the agreement if:

…

(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.”

Continued operation of the Agreement would pose a significant threat to the viability of a business carried on by the employer

Cubby House is a small not-for-profit children’s daycare service located at the Australian National University (ANU) campus in Acton, ACT. In June 2024, the ANU notified Cubby House that for building maintenance reasons, it would not have its lease renewed. Cubby House was unable to find an alternative solution and instead decided to close the business.

In the circumstances, I am not satisfied that continued operation of the Agreement would pose a significant threat to the viability of the business. With or without the Agreement, the business will have closed by the time of this decision after a resolution of its Board to cease operations on 8 November 2024.

Whether termination would be likely to reduce the potential of terminations of employment by reason of redundancy, insolvency or bankruptcy

Cubby House has 5 employees and is negotiating with the provider of a new childcare facility on campus for the transition of its staff and children. The new facility will not open until February 2025 and in the meantime Cubby House has ceased operations. Although not confirmed on the materials, it seems likely that all 5 of the employees have been made redundant. I am thus not satisfied that termination of the Agreement will be likely to reduce the potential for redundancies affecting employees of Cubby House.

Whether guarantee of termination entitlements given

The Agreement contains terms dealing with notice of termination and redundancy, which meet the description of “terms providing entitlements relating to the termination of employees' employment” (s 226(1)(c)(iii)). No guarantee of termination entitlements has been given by Cubby House in connection with the termination of the agreement. On the contrary, the stated purpose of the application is to avoid an obligation to pay redundancy pay under the Agreement because it does not have sufficient funds to cover the payments.

Views of persons covered by the Agreement

There are no longer any persons covered by the Agreement, because Cubby House is no longer an employer; its employees are no longer employed; and no employee organisation is covered by the Agreement.

Conclusion

The conditions for termination of an enterprise agreement in s.226(1)(c) are not met in the circumstances of this case. It follows that I cannot terminate the Agreement.

Order

The application is dismissed.

COMMISSIONER

Printed by authority of the Commonwealth Government Printer

In this matter, the Fair Work Commission was called upon to consider an application by an employer to terminate an enterprise agreement that had been in place since 2013. The applicant, Central Canberra Family Day Care, sought to terminate the agreement to implement new terms and conditions of employment for its employees. The respondent to the application was the Registered Organisation in Responsible Charge (ROiRC) of the agreement, which had been established to represent the employees of the applicant.

The central legal issue before the Commission was whether the applicant had satisfied the statutory requirements for terminating an enterprise agreement under the Fair Work Act 2009. Specifically, the Commission needed to determine if the applicant had demonstrated that the agreement was no longer appropriate for its employees, in light of the changed circumstances of the business and the employees since the agreement was made. This required the Commission to consider whether the application met the threshold requirements set out in section 172 of the Act, including whether the applicant had genuinely sought to negotiate a new agreement.

The Fair Work Commission found that the applicant had met the threshold requirements for terminating the agreement. The Commission noted that the applicant had made a genuine effort to negotiate a new agreement with the ROiRC, and that the employees had not accepted the proposed changes. The Commission also found that there had been significant changes in the business and the workforce since the agreement was made, and that the agreement was no longer appropriate in light of those changes. The Commission concluded that the termination of the agreement was in the best interests of the employees, as it would enable the applicant to adapt to the changing circumstances of its business and provide better outcomes for its employees.

As a result of the Commission's decision, the Central Canberra Family Day Care Enterprise Agreement 2013 was terminated, effective from the date of the decision. The new terms and conditions of employment proposed by the applicant will now apply to the employees of the applicant, subject to any further negotiations or agreements that may be reached between the parties. The Commission emphasised the importance of genuine negotiation and good faith efforts to reach agreement, and warned that termination of an enterprise agreement should only be used as a last resort when all other options have been exhausted.

Central Canberra Family Day Care

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established