Chubb Fire and Security Pty Ltd T/A VitalCall

[2018] FWCA 7008

[2018] FWCA 7008

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.225—Enterprise agreement

Chubb Fire and Security Pty Ltd T/A VitalCall
(AG2018/4868)

VITALCALL EMERGENCY RESPONSE OPERATIONS COLLECTIVE AGREEMENT 2015-2018

Clerical industry
SENIOR DEPUTY PRESIDENT HAMBERGER	SYDNEY, 15 NOVEMBER 2018

Termination of the VitalCall Emergency Response Operations Collective Agreement 2015-2018.

[1] On 31 August 2018, Chubb Fire and Security Pty Ltd T/A VitalCall (VitalCall) applied to the Fair Work Commission (the Commission) for the termination of the VitalCall Emergency Response Operator Collective Agreement 2015-2018 (the 2015 agreement) pursuant to s.225 of the Fair Work Act 2009 (the FW Act). The 2015 agreement has a nominal expiry date of 28 February 2018.

[2] A number of employees and the Australian Municipal, Administrative, Clerical and Services Union – Queensland Together Branch (the ASU) indicated their opposition to the application. VitalCall and the ASU both indicated their willingness to deal with the application ‘on the papers’. I issued directions, and VitalCall and the ASU filed written submissions and witness statements. This decision is based on that material.

Background

[3] VitalCall provides personal alert devices to predominantly elderly and frail customers in Australia and New Zealand. These devices are monitored 24 hours a day, seven days a week. When a customer activates a personal alert device, the alarm unit calls the VitalCall response centre.

[4] VitalCall’s employees work as emergency response operators (EROs) or customer representatives at sites in Salisbury, Queensland and Sydney, New South Wales.

[5] The 2015 agreement only covers EROs at the Salisbury site. At the time the 2015 agreement was made, it covered 28 EROs. Currently, the 2015 agreement covers 20 EROs. VitalCall also employs another six EROs in Sydney whose terms and conditions of employment are governed by the Clerks – Private Sector Award 2010 (the modern award) and common law contract.
[6] Negotiations commenced for a replacement for the 2015 agreement in February 2018. VitalCall issued a notice of employee representational rights and three employees were nominated as bargaining representatives. Management and employee representatives held a number of meetings over succeeding months.

[7] In the course of negotiations, VitalCall formed the view that it would be difficult to achieve a replacement agreement. In particular, it considered that there were terms in the 2015 agreement that would be difficult to be renewed in a similar form and pass the Better Off Overall Test (the BOOT). This led VitalCall to make a decision on 8 August 2018 to cease bargaining for a new agreement and to ‘transition’ from the 2015 agreement to the modern award.

[8] An ASU organiser, Billy Colless, visited VitalCall on 25 January 2018. He advised the local manager that the ASU had members at VitalCall and intended to be a part of negotiations for a replacement agreement. It appears the ASU was not invited to attend the negotiation meetings that took place on 6 February, 27 February, 3 May, 18 July or 1 August 2018.

[9] It appears that on 21 May 2018, Mr Colless and VitalCall’s Director of Employee Relations, Nicolas Saunders, exchanged emails, in which Mr Colless made it clear that the ASU wished to participate in the negotiations for a replacement agreement. It appears that Mr Saunders indicated VitalCall’s willingness to negotiate with the ASU and requested information about Mr Colless’s availability.

[10] It appears that no response was provided until 3 August 2018, when the ASU requested a list of meeting dates.

[11] On 7 August 2018, Michael Thomas, the ASU Director, Industrial Services, wrote to Mr Saunders alleging that it had failed to meet the good faith bargaining requirements under s.228 of the FW Act. In particular, he said that negotiation meetings had occurred on 18 July and 2 August 2018 without the ASU being advised, and that ASU representatives had asked to participate, but no avail. He also claimed that the ASU’s request for information on the progress of negotiations to date had been fruitless.

[12] In conclusion, Mr Thomas requested written information on the progress of negotiations to date, including any minutes, logs of claim, or other material that had formed part of negotiations and a schedule of further meetings and any timetable relating to the ongoing finalisation of the agreement that might exist. He indicated that should this information not be forthcoming, the ASU would consider the options available to it under the FW Act.

[13] On 9 August 2018, Mr Saunders responded, saying that VitalCall had at all times been prepared to negotiate with the ASU in relation to a replacement for the 2015 agreement. He said that despite requests to do so, Mr Colless had failed to provide information about his availability so that a meeting could be scheduled. He denied being aware of any requests for ASU representatives to attend the meetings on 18 July or 2 August 2018. He specifically rejected the ASU’s assertion that the good faith bargaining requirements had not been met.

[14] Mr Saunders went on to say that the company had received information from employees that a replacement of the 2015 agreement might not pass the BOOT and would not therefore be approved by the Commission. He also said that they had received requests that they consider moving from the 2015 agreement on to the modern award. He continued:

‘Following receipt of these views from employees, Chubb has been considering the situation and believes that, without significant changes to the existing EA document, a replacement EA would not pass the Better Off Overall Test and would therefore not be approved by the Commission. We have also looked into the employee request to move to the Award and believe that such a move could provide increased benefits to employees and be a viable alternative to the current Enterprise Agreement.

In light of this we have decided to cease the current negotiations for a new Vital Call Enterprise Agreement.’

[15] Also on 9 August 2018, VitalCall advised the employee bargaining representatives and the employees of its decision to cease bargaining for a new agreement and to transition to the modern award.

[16] Over the following days, Mr Saunders held discussions with most of the affected employees about how the decision would affect them. In early September 2018, VitalCall wrote a letter to the affected employees, which included the following:

‘Preservation of entitlements

Prior to making the decision to move to the Award, the Company investigated any differences between the two documents and held discussions with employee representatives and individual employees to consider the potential impacts and to hear any feedback. As a result of these discussions we have decided to preserve a number of entitlements from the Agreement for the existing VitalCall workforce who are covered by the Agreement. The Agreement terms that will be preserved are:

4. The method of calculating redundancy entitlements;

5. The payment of triple time for Christmas day and one other public holiday per year (the preserved entitlement applies to Good Friday but we have been asked to look into moving it to another day and are willing to do so if another day can be agreed).

6. The night shift meal allowance (but only for employees on a permanent night shift arrangement.)

Rates of Pay

For employees currently on Agreement Level 1 and 2, the rates of pay will be updated to reflect the rates in the Award (that are higher than the Agreement) and this change will be implemented immediately with an effective date of 1 July 2018.

Employees who are employed on Agreement level 3 or 4, on the day the Commission sets for termination of the Agreement will have their current hourly rates preserved (note that these rates will not apply to any new appointments to these levels after the date the Agreement is terminated).

In addition to the points above, the Company has been asked to consider making a payment in lieu of any backpay that would have arisen had the Agreement been renewed. We are happy to do this, so, in the event that the Fair Work Commission grants the Company’s application to terminate the Agreement, we will make a one off payment of $600 to each employee covered by the Agreement that day. This will be paid and taxed as an ex-gratia payment.’

Consideration

[17] The provisions concerning the termination of enterprise agreements after their nominal expiry date are set out in Subdivision D of Division 7 of Part 2-4 of the FW Act. This provides as follows:

‘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.

227 When termination comes into operation

If an enterprise agreement is terminated under section 226, the termination operates from the day specified in the decision to terminate the agreement.’

[18] The first issue to be determined is whether it would be contrary to the public interest to terminate the agreement. As was made clear by the Full Bench in Kellogg Brown, 1 while the content of the notion of the public interest cannot be precisely defined, it is distinct in nature from the interests of the parties.

[19] The ASU, in its submissions, argued that that the Commission should be satisfied that it is not in the public interest to terminate the 2015 agreement. It contrasted the current case with a number of other termination of agreement cases dealt with by the Commission:

‘In this case, [VitalCall] has only held 3 negotiation meetings, has failed to include the union as a bargaining representative at any of those, despite being put on notice of the union’s desire to take part in negotiations, and merely seeks to apply the minimum pay conditions mandated by the Award as an alternative to bargaining. No proposed agreement has been put to employees nor has the bargaining been protracted or difficult.

Further, rather than raising any issues regarding restrictive provisions of the agreement impacting on productivity and efficiency, the employer’s reason for ceasing bargaining is that substantial changes would need to be made to the agreement for it to pass the Better Off Overall Test.

In this case the applicant seeks to terminate the agreement as part of an overall industrial strategy to avoid enterprise level collective bargaining in good faith and deny its employees the opportunity to achieve productivity and fairness through collective bargaining.

Granting the employer’s request would reward its failure to bargain in good faith with the union, undermine good faith bargaining for an agreement that delivers productivity benefits at the enterprise level and limit options available to employees to seeking majority support determinations to simply continue a process that the employer voluntarily initiated.’

[20] The ASU submitted that such an approach would be contrary to the objects of the FW Act generally, and the objects of Part 2-4. To terminate the agreement could also be argued as (impermissibly) favouring a presumption that the termination of an enterprise agreement upon reaching its nominal expiry date is appropriate.

[21] Each application to terminate an enterprise agreement has to be considered in the light of its own particular circumstances, subject of course to the statutory considerations set out in s.226 of the FW Act.

[22] Whatever the parties may think, terminating the 2015 agreement is a separate issue from the desirability of negotiating a new enterprise agreement. If the Commission did terminate the 2015 agreement, this should not be seen as endorsing the preference of the employer not to negotiate a new enterprise agreement. There are provisions in the FW Act with regard to the obligation to bargain in good faith (under certain circumstances) for an enterprise agreement. Those obligations would not be affected by a decision to terminate the 2015 agreement. Nor do I consider that the ability of the parties to negotiate a new enterprise agreement would be adversely affected by terminating the 2015 agreement.

[23] There is insufficient evidence for me to be satisfied that VitalCall has breached its good faith bargaining obligations. In particular, it is far from clear that VitalCall was deliberately trying to exclude the ASU from the negotiation process. The evidence is that it was willing to meet with the ASU and discuss a new agreement – at least until it decided that it no longer wished to continue with the bargaining process.

[24] I am satisfied that at least some employees (particularly those at Levels 1 and 2) are likely to be somewhat better off under the modern award if the application is granted.

[25] In these circumstances, I do not consider that terminating the agreement would be contrary to the objects of the FW Act. I am satisfied that granting the application would not be contrary to the public interest.

[26] The next issue I have to consider is whether it is appropriate to terminate the agreement taking into account all the circumstances including the views of the employees and the employer, and the circumstances of the employees and the employer, including the likely effect that the termination will have on each of them.

[27] With regard to the views of the employees, 16 of them have signed a petition headed ‘WE ARE READY AND WLLING TO NEGOTIATE’. It then says:

‘Vital Call Chubb, Our employer has made assertions that we the staff at vital call requested to be removed to the award, and that they have had consultation with us on removing our Collective Agreement, We remain committed to negotiating and reaching agreement.’

[28] This is prima facie evidence that a majority of the affected employees wish to negotiate a new enterprise agreement. It does not, however, indicate that the employees would rather remain on the 2015 agreement than be placed on the modern award.

[29] As I have already noted, at least some employees are likely to be somewhat better off under the modern award if the application is granted. Given the undertakings given by VitalCall, it seems unlikely that any employees would be worse off if the application were to be granted. Rather, the combined effect of the termination of the agreement and the undertakings would likely be that the total amount paid to the VitalCall ERO team in Salisbury increases. VitalCall’s undertakings are found in annexure A to this decision.

[30] The employer is in favour of the termination of the 2015 agreement. It would benefit from the standardisation of employment arrangements across all its EROs.

Conclusion

[31] I am satisfied that the 2015 agreement should be terminated.

[32] The date of effect should be 21 days from the date of this decision. This should be enough time to put the requisite payroll arrangements in place.

[33] An order to this effect will be issued in conjunction with this decision.

SENIOR DEPUTY PRESIDENT

Written submissions:

Chubb Fire and Security Pty Ltd T/A VitalCall: 12, 25 October 2018.

Australian Municipal, Administrative, Clerical and Services Union- Queensland Together Branch: 19 October 2018.

Annexure A

For any employees covered by the VitalCall Emergency Response Operations Collective Agreement 2015-2018 (Agreement) as at the day that the Agreement terminates (the Employees), the following entitlements will be maintained by the employer:

•  clauses 25.4 and 25.5 of the Agreement (that deal with the calculation of redundancy payments); and

•  clauses 10.2.3 and 13.1.7 to the extent that they deal with work performed on Christmas Day and Good Friday (that provide for payment for time worked on these days at triple time rates).

In addition to the above, for any periods where an Employee is rostered to work under a permanent night shift arrangement:

•  clause 11.3 of the Agreement will be maintained (that provides for a night shift meal allowance of $14.49). For clarity this entitlement will not be preserved where night shifts are worked on a non-permanent, intermittent or ad hoc basis.

In addition to the above, for any Employees who are permanently appointed at Level 3 or Level 4 under the Agreement as at the date of Termination, the hourly rates of pay provided for by the Agreement (being $24.52 for Level 3 and $27.10 for Level 4) will be maintained as minimum hourly rates of pay. These rates will not apply to any appointment to these levels (or their equivalent under the relevant Award) after the termination of the Agreement.

The above entitlements will be maintained for each of the Employees on an individual basis until the earlier of:

1. the termination of employment of that employee; or

2. the movement of the employee into a role that falls outside the coverage of the Agreement; or

3. the approval of a new Enterprise Agreement that covers the employee.

In addition to the contingencies above, the preservation of minimum rates of pay for employees at Agreement Level 3 or 4 will also cease where an employee is appointed to a new role that would have otherwise resulted in a change to their pay level (i.e. an increase or decrease in pay level). For clarity, the cessation of pay rate preservation in these circumstances will not result in the cessation of any other preserved entitlements (unless one of the general termination situations arises at the same time).

 1   Kellogg Brown & Root Pty Ltd & Ors v Esso Australia Pty Ltd (2005) PR955357 [23].

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