Certis Security Australia (WA) Pty Limited
[2023] FWCA 630
•9 MARCH 2023
| [2023] FWCA 630 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.225—Enterprise agreement
Certis Security Australia (WA) Pty Limited
(AG2023/354)
Business Risks International (WA) Pty Limited Employee Collective Agreement 2009
| Industries not otherwise assigned | |
| DEPUTY PRESIDENT BEAUMONT | PERTH, 9 MARCH 2023 |
Application for termination of the Business Risks International (WA) Pty Limited Employee Collective Agreement 2009
The application and outcome
On 16 February 2023, Certis Security Australia (WA) Pty Ltd (Applicant) applied under Schedule 3, Item 16 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) (Transitional Act) to terminate the Business Risks International (WA) Pty Limited Employee Collective Agreement (Agreement).[1] The Agreement passed its nominal expiry date in 2014.
Because the Agreement is a collective agreement-based transitional instrument, Item 16 of Schedule 3 of the Transitional Act applies. The effect of Item 16 is that the termination of agreement provisions found in Subdivision D of Division 7 of the Fair Work Act 2009 (Cth) (the Act) applies to the Agreement as if a reference to an enterprise agreement included a reference to a collective agreement-based transitional instrument. It follows that this type of application is properly dealt with pursuant to s 225 of the Act, with the same considerations required as if it were an enterprise agreement made under the Act.
The matter was determined on the papers. This was the appropriate course given the absence of objection to the proposition, and that the evidence revealed no factual dispute. Having reviewed the material provided, I am satisfied that s 226(1)(a) of the Act has been met and termination is appropriate in all the circumstances.
Background
The background to the application was provided by Mr Greg Shaw, the Applicant’s National Manager – Human Resources. For the most part, the background has been extracted from his witness statement and the direct evidence attached to the same.
The Applicant provides security services to its clients in airports, shopping centres, educational institutions, warehouses, government buildings and commercial buildings across Australia.[2] It has operations in New South Wales, Queensland, Victoria, South Australia, Western Australia, and the Australian Capital Territory.[3]
The Agreement was negotiated in 2009, and the parties recorded as being bound and covered by the agreement are Business Risks International (WA) Pty Limited (ABN 34 132 818 421) (BRI WA) and all Western Australian employees of that corporate entity.[4]
In 2016, BRI WA’s parent company, Business Risks International Group Holdings Pty Ltd (ACN 602 871 287), was purchased by the Singaporean company Certis International Pte Ltd. After that date, all entities in the Business Risks International corporate group were rebranded as corporate entities of Certis Security Australia.[5]
On 31 August 2019, the name of BRI WA was changed to Certis Security Australia (WA) Pty Limited, maintaining the same ABN, 34 132 818 421.[6]
Mr Shaw stated that he understood and believed that at the relevant time, those employees who were employed by BRI WA continued to be employed by the same corporate entity. However, the name of the entity simply changed to align with the Applicant’s brand. The employer entity and company numbers had not changed.[7] According to Mr Shaw the Agreement currently applies to Western Australian employees employed by the Applicant.[8]
Mr Shaw clarified that whilst initially informing the Commission that four employees were covered by the Agreement, he did so on the basis of an outdated employee list.[9] Mr Shaw confirmed that there were two employees covered by the Agreement.[10] Mr Shaw said that the two employees hold the following positions:
(a)Permanent Full-time Security Officer (Patrols) located in the City of Rockingham in Western Australia. The position is a permanent night shift position (Employee 1); and
(b)Part-Time Security Officer located a CBRE site in Jandakot, Western Australia, performing concierge and reception services. The position involves working set day shifts, on average 2 – 3 days per week (Employee 2).
Whilst the two employees, Employees 1 and 2, are covered by Agreement and it applies to them in their employment, Mr Shaw explained that for the purpose of industrial harmony and ease in the business, all employees of the ‘Certis group companies in Western Australia’ were paid under the Security Services Industry Award 2020 (the Award).[11] Mr Shaw elaborated, noting that the Agreement terms had not been strictly applied to the two employees because the Applicant held the view that they received more pay and better conditions under the Award than under the Agreement.[12]
Mr Shaw said that the only notable Agreement entitlements that were better than the Award were the base rates of pay, or more specifically the ‘Ordinary Hourly Rates’ for each classification listed in Part 3 of the Agreement. Mr Shaw continued that this was because the Agreement provided for an increase in such rates of pay by 2.5% every year.[13]
Mr Shaw acknowledged that in the process of preparing his witness statement in support of the application, he caused calculations to be performed comparing the rates of pay of the two employees as paid under the Award and how they would have been paid, if paid in accordance with the Agreement. The calculations were derived from sampling the employees’ rostered shifts over three full consecutive months (November 2022 until January 2023) and running parallel calculations to determine the amount due under the Agreement and the Award.[14] Whilst Employee 1 earned more under the Award than the Agreement, the same could not be said for Employee 2.[15] Mr Shaw identified that Employee 2 would have received $1584.22 higher than the amount paid under the Award.[16]
It is observed that the Agreement is on the list of ‘zombie agreements’ that will be terminated on 7 December 2023.[17] The Explanatory Memorandum to the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 (Cth) provides the following rationale for the termination of such agreements:
These remaining transitional instruments set pay and conditions for covered employees, and many provide take-home pay and conditions inferior to those provided by the relevant modern award that would otherwise apply. Sunsetting these transitional instruments (following an extended transitional period provided upon commencement of the FW Act more than a decade ago) is expected to uplift terms and conditions of employment for many employees as they would become covered by the relevant modern award or (if made) enterprise agreement.[18]
Legislative framework
Section 225 of the Act provides that an employer covered by an agreement can apply to the Commission for the termination of an agreement if the agreement has passed its nominal expiry date.
Thereafter, the Commission is obliged to terminate the enterprise agreement if satisfied that the subsections of s 226 have been met. The section states as follows:
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.
Consideration
Section 226(1) of the Act requires that the Commission terminate an enterprise agreement that has passed its nominal expiry date if satisfied that any of the three grounds listed have been met. These relate to the continued operation of the agreement being unfair to employees, the agreement being unlikely to cover any employees, or the continued operation of the agreement posing a significant threat to the viability of the business.[19] However, an additional consideration is whether the termination is appropriate. The Commission must terminate an enterprise agreement under s 226(1) only if satisfied that it is appropriate in all the circumstances to do so.
In the recent decision of Application by Shop, Distributive and Allied Employees Association,[20] Deputy President Clancy observed that the approach to assessing appropriateness, as expressed in Re Aurizon Operations Ltd[21] (Aurizon) was also applicable for the termination of agreements under the newly amended s 226 of the Act. This was the case notwithstanding that Aurizon addressed the termination of an agreement prior to the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth):
All of the circumstances also need to be taken into account in considering whether termination of the agreements is appropriate. In particular the views of employers and employees covered by the agreement, their circumstances, and the impact of termination need to be taken into account. The requirement in s. 226(b) to take into account all of the circumstances including those set out in s. 226(b)(i) and (ii) is a requirement to take the matters into account and to give them due weight in assessing whether it is appropriate to terminate an enterprise agreement. In assessing appropriateness by taking into account all of the circumstances, we approached the task by reference to the construction of s. 226 and the contextual matters that bear upon that construction dealt with earlier as well as giving specific consideration to the matters identified in s. 226(b)(i) and (ii). (reference omitted)
First, I am satisfied that the Applicant has standing to make the application and desires the termination of the Agreement. Further, it is evident that nominal expiry date of the Agreement has well and truly passed.
Second, for the following reasons, I am satisfied the continued operation of the Agreement would be unfair to the employees covered.
As observed, the Agreement was made approximately 14 years ago and in many respects contains significantly less beneficial terms and conditions than those contained in the Award.
The termination of the Agreement would not lead to an absence of award coverage for the employees, noting of course the aforementioned Award coverage. Further, the Award contains entitlements that are superior to the Agreement or simply do not appear in the Agreement, including:
(a)minimum and maximum shift lengths. Minimum shift lengths guarantee for employees a minimum period of payment, and maximum shift lengths assist to reduce fatigue;
(b)the requirements that rosters be easily accessible and cannot be changed without the giving of 7 days’ notice, providing employees with reasonably predictable hours of work and more scope to plan their lives outside of work;
(c)the requirement that, if the Applicant does not give its employees 7 days or more notice of any change to their roster, that the employee be paid at the applicable overtime rate for any time worked outside the previously notified shift start/finish times;
(d)Rostered Days Off (RDO) and prescribed methods and requirements for establishing a RDO system. The RDO system allows employees to take paid time off without having to use their accrued annual leave;
(e)the requirement that an employee be paid at a higher classification rate for the time spent performing duties within that higher classification;
(f)an entitlement to monetary allowances which are provided for in addition to an employee’s salary or hourly rate, such as the first aid allowance, broken shift allowance, supervision allowance, and meal allowance;
(g)significantly higher overtime and penalty rates for employees than the ordinary hourly rates under the Agreement, which are said to include all loadings and allowances;
(h)the ability to receive time off in lieu instead of payment for overtime, which gives employees greater flexibility and autonomy over when they want to come to work;
paid rest breaks in addition to meal breaks for shifts greater than 4 hours in length;
(j)the entitlement to receive annual leave loading of 17.5% when taking paid annual leave and when accrued but unused annual leave is paid out upon termination of employment;
(k)significantly higher public holiday rates than those under the Agreement; and
(l)more comprehensive consultation obligations in relation to major workplace changes and changes to rosters and hours of work than the general consultation clause in the Agreement.
However, having reviewed the Applicant’s financial modelling and compared it to the Commission’s own in respect of the two employees, it is apparent that the termination of the Agreement would result in Employee 2 receiving less pay. The Applicant has therefore provided the undertaking attached to this decision as Annexure A. In short, the undertaking provides that Employee 2 will not receive less than the minimum rates of pay payable under both the terms of the Agreement and the Award, until 7 December 2023. Of course 7 December 2023 is the date upon which the Agreement would otherwise terminate.
Having regard to the deficiency of terms within the Agreement when compared with the Award (even taking into account some of the greater entitlements in the Agreement such as the ordinary rates of pay), employees would be entitled to improved conditions if not engaged under the Agreement.
Regarding the views of the two employees covered by the Agreement, Mr Shaw had gone to great pains to consult with the employees and solicit their views. Whilst Employee 1 had communicated verbally to Mr Shaw support for the termination of the Agreement, Employee 2 provided a Form F24D supporting the termination of the Agreement.
It is evident that the termination of the Agreement would not impact on the achievement or otherwise of the objective of the Act or on the objects of Part 2-4 of the Act. Further, given that the Award would cover the relevant employees on termination of the Agreement and an undertaking has been provided to protect the minimum rates of pay in the Agreement that proved to be better than the Award, I am of the view that the termination of the Agreement would not affect the maintenance of proper industrial standards.
It was not apparent from the evidence before me that any employee of the Applicant or any union or industrial organisation had taken steps to initiate bargaining for a new enterprise agreement to cover the relevant employees at any point during employment with the Applicant.[22] It follows that the termination of the Agreement would not have any detrimental impact or result in a shift in bargaining power, in relation to enterprise bargaining, for the Applicant or any other relevant party.
Further, the evidence does not point to the termination of the Agreement having any detrimental impact on employment levels within the business of the Applicant. There is no evidence before me to suggest that the Applicant will reduce labour hours offered or employment levels generally as a result of the termination.
Conclusion
I am satisfied that it is appropriate in all the circumstances to terminate the Agreement. For the sake of fulsomeness, it is noted that in all the circumstances s 226A of the Act is irrelevant. The Applicant has provided cogent reasoning behind why the termination of the Agreement should operate on and from the date of this decision and I see no reason for deviating from the position it has advanced. Accordingly, and as already noted, pursuant to s 226 of the Act the Agreement is terminated, with the termination to take effect on and from 9 March 2023.[23]
DEPUTY PRESIDENT
Annexure A
[1] [AC32411].
[2] Witness Statement of Greg Shaw dated 27 February 2023 (Shaw Statement) [8].
[3] Ibid [9].
[4] Business Risks International (WA) Pty Limited Employee Collective Agreement 2009, clause 2.1.
[5] Shaw Statement (n 1) [16] – [17].
[6] Ibid [18] – [19], annexure GS-1 at 1–7.
[7] Ibid [20].
[8] Ibid [21].
[9] Ibid [24].
[10] Ibid [24].
[11] Shaw Statement [6]; MA000016.
[12] Shaw Statement (n 1) [27].
[13] Ibid [33].
[14] Ibid [34].
[15] Ibid [36].
[16] Ibid.
[17] Ibid annexure GS-1 at 8.
[18] Explanatory Memorandum, Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 (Cth), xix [87].
[19] Fair Work Act 2009 (Cth) s 226(1).
[20] [2023] FWCA 429.
[21] (2015) 249 IR 55.
[22] Shaw Statement (n 1) [22].
[23] PR751204.
Printed by authority of the Commonwealth Government Printer
< AC326353 PR751204>
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