Comfort Engineering Pty Ltd T/A Ductrite

[2020] FWCA 4678

[2020] FWCA 4678

FAIR WORK COMMISSION

DECISION

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

Comfort Engineering Pty Ltd T/A Ductrite
(AG2020/2070)

DUCTRITE ON SITE COLLECTIVE AGREEMENT 2012 - 2015

Plumbing industry
DEPUTY PRESIDENT ANDERSON	ADELAIDE, 2 SEPTEMBER 2020

Application for termination of the Ductrite On Site Collective Agreement 2012 - 2015

[1] Following a hearing on 18 August 2020 and upon considering material then before me and after hearing from the Applicant employer (Comfort Engineering Pty Ltd T/A Ductrite) (‘Ductrite’) I issued a provisional decision in the following terms: 1

“I am satisfied that there are no reasonable grounds to believe that employees have not agreed to terminate the Agreement. I find that a majority of employees voted on 3 July 2020 to terminate the Agreement.

I am also satisfied that there is no basis to consider that it is inappropriate to terminate the agreement taking into account the views of the employees or their representatives as no such submissions were provided.

Accordingly, my provisional view is that it is appropriate to terminate the Agreement and to approve its termination.

Ductrite has requested a four week period before the termination takes effect.

This appears reasonable. My provisional view is that the termination will come into effect from 12.00am on Tuesday 15 September 2020.”

[2] My published provisional decision advised of the following post-hearing development:

“Since proceedings concluded on 18 August 2020 it has been drawn to my attention that the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (Electrical, Energy, and Services Division) South Australian Branch (CEPU) was not served with the application nor the subsequent Directions and Notice of Listing.

The CEPU is not expressed in the Commission’s 2013 decision approving the Agreement as being covered by the Agreement (as would have been open under sections 183 and 201(2) of the FW Act). However, clause 2 of the Agreement recognises the CEPU as having had past representative capacity (though the agreement applies to employees whether CEPU members or not).

In these circumstances, and notwithstanding employees having been provided a right to appear directly or via a representative at the 18 August 2020 hearing, I consider it appropriate to provide a further opportunity for the CEPU to be heard if it wishes to do so.

I will direct that the CEPU be served by the Commission with these proceedings (including this Decision) by close of business 19 August 2020. I will direct that if the CEPU wishes to be heard, it file a written submission by close of business 21 August 2020.

Should the CEPU not file a submission by this date this provisional decision will be final and I will issue an Order giving effect to this decision on the abovementioned terms. Should the CEPU wish to be heard, I will consider its submission and issue further directions should it be appropriate to do so.”

[3] The Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (Electrical, Energy, and Services Division) South Australian Branch (‘CEPU’) was forthwith served by the Commission with my provisional decision and the originating proceedings.

[4] On 21 August 2020 the CEPU advised the Commission and the employer that it objected to termination of the Ductrite On Site Collective Agreement 2012 - 2015 (the Agreement).

[5] I issued further directions that same day (21 August 2020) setting the matter down for further hearing on the CEPU objection and directing that the employer make all employees aware of the further directions and provide a copy of the CEPU submission to employees should a request be made.

[6] I further heard the matter on 1 September 2020.

[7] The Applicant employer appeared as did the CEPU. No employee interests appeared despite being given notice.

[8] I reserved my decision.

Consideration

[9] This matter concerns an application made by Ductrite on 15 July 2020 to terminate the Agreement under section 222 of the Fair Work Act 2009 (the FW Act).

[10] Section 222 concerns applications for termination where termination has been agreed by employees.

[11] The applicant employer has standing to apply for termination of the Agreement under section 222 of the FW Act.

[12] Sections 222 and 223 of the FW Act state:

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

223 When 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.”

[13] The Agreement is a single enterprise agreement. It was approved by the Commission on 27 March 2013. 2 It was approved to operate from 4 April 2013 with a nominal expiry date of 1 July 2015. It has now passed its nominal expiry date.

[14] At the outset I record that it is regrettable that:

•  neither the application, nor the accompanying statutory declaration or oral submissions made by the Applicant employer on 18 August 2020 disclosed the fact that the CEPU had been involved in the 2012 negotiation of the Agreement, that the CEPU is referred to in clause 2.1 of the Agreement and that a stop/start collective bargaining process for a fresh agreement has been occurring between Ductrite and the CEPU; and

•  service of its application on the CEPU did not occur in circumstances where the Applicant employer had been in correspondence with the CEPU in the weeks leading up to the application being made such that Ductrite ought to reasonably have been aware that the CEPU may have an interest in these proceedings.

[15] It was only through the diligence of my Chambers in examining clause 2.1 of the Agreement that the potential interest of the CEPU came to my attention following proceedings on 18 August 2020.

[16] I note however that clause 2.1 is not clearly worded, that the Agreement applies to employees “whether a member of the CEPU or not” and that the Commission’s decision approving the Agreement on 27 March 2013 3 did not include an order under sections 201(2) – (2A) of the FW Act that the CEPU be a union covered by the Agreement (it would appear because no application was made by the CEPU at the time under section 183).

[17] That notwithstanding, the CEPU has a right to be heard on this termination application.

[18] The circumstances before me are that the Applicant employer seeks termination of the Agreement.

[19] It also appears, from the evidence before me, that a majority (but not an unanimity) of relevant employees (being persons currently employed under the terms of the Agreement) support the termination.

[20] The CEPU opposes the termination on the grounds set out in its written submissions 4 as expanded on at the 1 September 2020 hearing.

[21] The Applicant employer had filed a formal reply to the CEPU’s submissions. 5

[22] Whilst the CEPU acknowledges that a vote by majority occurred on 3 July 2020 to terminate the Agreement, it does not support termination of the Agreement because:

•  termination would result in employees falling back to coverage under the Plumbing and Fire Sprinklers Award 2010 (the Award);

•  wages and conditions of employment under the Award are inferior to those under the Agreement resulting in existing and new employees being potentially disadvantaged;

•  collective bargaining between Ductrite and the CEPU has stalled and should recommence by reference to the existing Agreement and not the Award. It says that termination of the Agreement may hinder collective bargaining and that would not be in the public interest. The CEPU advised the Commission that it had met employees on 22 July 2020 to discuss collective bargaining issues; and

•  Ductrite have not yet implemented the undertakings it has made to reach agreements with individual existing employees to maintain their existing terms and conditions should the Agreement be terminated.

[23] In response Ductrite submits:

•  employees by majority agreed to terminate the Agreement on 3 July 2020 and were fully informed in doing so;

•  the employer has undertaken to existing employees and to the Commission that it will apply a savings provision that maintains terms and conditions of the Agreement for each existing employee should the Agreement be terminated, and intends to reach agreement with individual existing employees to that effect in a timely manner; and

•  collective bargaining has stalled due to significant delays (including by the CEPU) and what the employer considers to be a number of unreasonable demands.

[24] On the material before me and having regard to each of the considerations in section 223 of the FW Act I consider that it is appropriate to terminate the Agreement, on the conditions set out below.

[25] I am satisfied that each employee covered by the Agreement was given a reasonable opportunity to decide whether to agree to termination of the Agreement in advance of the vote taken on 3 July 2020. Reasonable advance notice was given by the employer. In the weeks prior to the 3 July 2020 meeting and vote, the employer communicated with employees about the proposed termination via correspondence and meetings on 22 and 23 June 2020. Section 223(a) is made out.

[26] Being a single enterprise agreement, I am satisfied that a majority of employees who cast a valid vote approved the termination of the Agreement. A vote of employees was held on 3 July 2020 at which time a majority agreed to that course. Eighteen votes were cast. Eleven were cast in favour with seven against. Section 223(b) is made out.

[27] There are no other reasonable grounds for believing that the employees have not agreed to the termination. I note in this respect that in accordance with my directions of 20 July 2020 and 21 August 2020 employees covered by the Agreement were provided an opportunity to indicate whether any objection would be taken to the termination application or if they sought to be heard. No objection has been indicated by any of the employees covered by the Agreement and no employee has sought to be heard. Section 223(c) is made out.

[28] I now turn to section 223(d) considerations. The CEPU correctly identifies that in a number of important respects, both in relation to wages and also conditions, terms of the Award are inferior to those under the Agreement. This is a relevant consideration though not determinative in its own right. It has to be weighed against the fact of agreement by a majority of employees.

[29] With respect to existing employees that consideration is significantly mitigated by the undertaking the employer has made to those employees and to the Commission that it will apply a savings provision that maintains the terms and conditions of the Agreement for existing employees should the Agreement be terminated. The employer made this clear on the record in proceedings on 1 September 2020 and expressly confirmed that it intended to be held to the undertaking.

[30] This undertaking does not extend to new employees (those who may be employed). Whilst the employer has retained to itself a discretion whether to better the conditions of the Award with respect to new employees, I do not consider this consideration to be of such weight to impede termination of the Agreement where such a course has been agreed. Award conditions are themselves a modern and relevant safety net and any future collective bargaining agreement has the potential to further improve minimum conditions of new employees beyond that of the Award.

[31] Nor do I consider that the termination of the Agreement would impede the exercise of collective bargaining rights. Indeed, given the slow progress to date, it is possible that termination of the Agreement, whose nominal expiry date was more than five years ago, may incentivise meaningful bargaining.

[32] I note that there is no addition or subtraction to the statutory collective bargaining rights and obligations of either the employer, the employees or the CEPU as a consequence of this decision and order. Those rights and obligations are established by the FW Act and apply whether the Agreement is terminated or not. They include the obligation to bargain in good faith where bargaining processes have been lawfully commenced.

[33] For these reasons, I consider it appropriate to approve termination of the Agreement notwithstanding the objection of the CEPU and submissions made on its behalf.

[34] I now turn to date of operation.

[35] Relevant to my decision is the aforementioned undertaking given by Ductrite to existing employees and its intention to formalise agreements with those employees on a savings provision in a timely manner.

[36] As noted in my provisional decision of 18 August 2020, a period of approximately four weeks should be provided for the employer to complete those arrangements. I remain of that view. In light of the fact that time has elapsed since then, the indicative date of operation for termination of the Agreement will no longer be 15 September 2020. I will order that the date of operation be 30 September 2020.

Conclusion

[37] The provisions of section 223 of the FW Act have been made out. It is appropriate to terminate the Ductrite On Site Collective Agreement 2012 – 2015. The Commission approves its termination and grants the application made under section 222 of the FW Act.

[38] The termination will take effect from 12.01am on Wednesday 30 September 2020. In conjunction with this decision I issue an order in the foregoing terms. 6

DEPUTY PRESIDENT

Hearing Details:

Adelaide (by telephone),

2020,

September 1.

Appearances:

Mr R Bogers, for Comfort Engineering Pty Ltd T/A Ductrite

Ms E Hennessy, for the CEPU

Written Submissions:

CEPU, 20 August 2020

Comfort Engineering Pty Ltd T/A Ductrite, 28 August 2020, in reply

 1   [2020] FWC 4342 at [14] to [18]

 2   [2013] FWCA 1903

 3   [2013] FWA 1903

 4   20 August 2020

 5   28 August 2020

 6   PR722414

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