DECISION

Fair Work Act 2009
s.222—Enterprise agreement

Chemring Australia Pty Ltd
(AG2020/4001)

CHEMRING AUSTRALIA PTY. LTD. COLLECTIVE AGREEMENT 2018 - 2021

Manufacturing and associated industries
DEPUTY PRESIDENT GOSTENCNIK	MELBOURNE, 22 JANUARY 2021

Application for termination of the Chemring Australia Pty. Ltd. Collective Agreement 2018 - 2021.

[1] Chemring Australia Pty Ltd (Applicant) has applied, pursuant to s.222 of the Fair Work Act 2009 (Act), to terminate the Chemring Australia Pty. Ltd. Collective Agreement 2018 (Agreement). 1 The Agreement is expressed to cover the Applicant and its employees classified under the Agreement working at 230 Staceys Road, Lara Victoria and the Australian Workers’ Union.2

[2] The Agreement is a single enterprise agreement and its nominal expiry date is 31 October 2021. 3

[3] Section 222 of the Act provides:

“222 Application for the FWC’s 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 the FWC 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 the FWC considers it fair to extend that period—within such further period as the FWC allows.”

[4] Section 223 of the Act provides:

“223 When the FWC 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, the FWC must approve the termination if:

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

(d) the FWC 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.”

[5] Section 224 of the Act provides:

“224 When termination comes into operation

If a termination of an enterprise agreement is approved under section 223, the termination operates from the day specified in the decision to approve the termination.”

[6] Based on the material contained in the declaration of Ms M Calegari filed with the application, I am satisfied that the Applicant has complied with the requirements in s.220(2) of the Act. The Application has been made consistently with the requirements in s.222. I am satisfied that the termination was agreed to by a majority of the relevant employees who cast a valid vote to approve the termination as required by s.221(1). I am not aware of any reasonable grounds for believing that the employees have not agreed to the termination.

[7] As mentioned above, the Australian Workers’ Union is an organisation which is covered by the Agreement. In correspondence to my Chambers on 15 January 2021, the Australian Workers’ Union advised that it neither accepted nor contested the termination of the Agreement.

[8] In the circumstances I consider it appropriate to approve the termination.

[9] The termination will operate from 22 January 2021.

[10] An order giving effect to this decision is separately issued in PR726269.

DEPUTY PRESIDENT

1 AE505184

2 Ibid at cl 1.2

3 Ibid at cl 1.3.1

Printed by authority of the Commonwealth Government Printer

In the recent case of Chemring Australia Pty Ltd, the Fair Work Commission was asked to consider an application to terminate an existing collective agreement. The application was brought by the employer, Chemring Australia Pty Ltd, seeking to terminate the Chemring Australia Pty. Ltd. Collective Agreement 2018 - 2021 on the basis of changed circumstances. The application arose from a dispute concerning the continued applicability and fairness of the agreement in light of significant operational changes within the company. The Commission was tasked with determining whether the changes were substantial enough to warrant the termination of the existing agreement and, if so, what transitional arrangements should be put in place to manage the impact on employees.

The central legal issue before the Commission was whether the significant operational changes experienced by Chemring Australia Pty Ltd constituted a substantial change in circumstances that justified terminating the existing collective agreement. The employer argued that the changes had rendered the agreement inequitable and no longer reflective of the current workplace conditions. The Commission had to consider the criteria for substantial change in circumstances, which includes examining the nature and extent of the changes, their impact on the employees, and whether the changes were foreseeable. The Commission also needed to balance the employer's rights to manage its business against the employees' rights to fair and equitable terms of employment.

In its decision, the Commission found that the changes experienced by Chemring Australia Pty Ltd did indeed amount to substantial changes in circumstances. The employer's evidence demonstrated that the operational changes had significantly altered the nature of work and the workforce, leading to a situation where the terms of the existing agreement were no longer fair or reasonable. The Commission highlighted the unpredictability of the changes and their substantial impact on the employees, which justified the termination of the agreement. The Commission also detailed the transitional arrangements necessary to ensure a fair and orderly transition for employees, including provisions for redundancy payments and the protection of existing terms and conditions until new arrangements could be negotiated. The Commission's decision underscored the importance of maintaining fairness and equity in the workplace, even in the face of significant business changes.

Chemring Australia Pty Ltd

DECISION

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