Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Nilsen (NSW) Pty. Ltd
[2023] FWCFB 132
•28 JULY 2023
| [2023] FWCFB 132 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
Sch. 3, Item 20A(4)—Application to extend default period for agreement-based transitional instruments
Application by Dilek Henderson
(AG2023/1697)
| JUSTICE HATCHER, PRESIDENT | SYDNEY, 28 JULY 2023 |
Application to extend the default period for Australian Workplace Agreement between Dilek Henderson and Symphony Services Australia Limited.
Ms Dilek Henderson has lodged an application to extend the default period for an individual agreement-based transitional instrument pursuant to subitem (4) of item 20A of Sch 3 to the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) (Transitional Act). The relevant instrument is an Australian Workplace Agreement (AWA) made under the Workplace Relations Act 1996 (Cth) (WR Act) in 2006. The parties to the AWA are Ms Henderson and her employer, Symphony Services Australia Limited (SSA). The application is supported by SSA.
The main aspects of the statutory framework applicable to this application were detailed in the recent Full Bench decision in Suncoast Scaffold Pty Ltd.[1] In short, the AWA the subject of the application is an agreement-based transitional instrument preserved in operation after the repeal of the WR Act and the commencement of the Fair Work Act 2009 (Cth) (FW Act) by item 2 of Sch 3 to the Transitional Act. The Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 amended Sch 3 to add item 20A. Item 20A provides for the automatic sunsetting of remaining agreement-based transitional instruments at the end of the ‘default period’. The default period is the period ending on 6 December 2023 unless extended by the Commission. Subitem (6) of item 20A provides that, on application under subitem (4), the Commission must extend the default for a period of no more than four years if either:
(a) subitem (7), (8) or (9) applies and it is otherwise appropriate in the circumstances to do so, or
(b) it its reasonable in the circumstances to do so.
Subitem (7) applies only where the application is made at or after the notification time for a proposed enterprise agreement that, in the case of an individual agreement-based transitional instrument, will cover the employee covered by the instrument, and bargaining for the proposed enterprise agreement is occurring. It is not contended in respect of this application that subitem (7) applies. Subitem (9) applies only to applications relating to collective agreement-based transitional instruments and is therefore not relevant here. Subitem (8) provides:
(8) This subitem applies if:
(a) the application relates to an individual agreement-based transitional instrument; and
(b) the employee covered by the instrument would be an award covered employee for the instrument under subitem (10) if the instrument were a collective agreement-based transitional instrument; and
(c) it is likely that, as at the time the application is made, the employee would be better off overall if the instrument applied to the employee than if the relevant modern award referred to in that subitem applied to the employee.
Under subitem (10), for a person to be an ‘award covered employee’ for the purpose of subitem (8)(b), they must be covered by one or more modern awards that are in operation and cover the employee in relation to the work to be performed under the instrument.
The application, as filed, stated the following reason as to why the default period for the AWA should be extended:
I am better off under my AWA as my AWA has a redundancy provision.
My employer is covered by the modern award Clerks—Private Sector Award 2020 (code MA000002) and has less than 15 employees therefore I am not entitled to a redundancy payment if terminated.
On one view, the above constitutes an invocation of subitem (8). However, at a preliminary hearing on 16 June 2023, Ms Henderson conceded that the Clerks—Private Sector Award 2020 (Award) did not cover her. We consider that this concession was properly made. Her position is that of Finance Manager, which Ms Henderson described in her written submissions as a ‘senior management position’, and her salary (even as prescribed in the AWA as at 2006, and for a part-time position of 22.05 hours per week) is, on a weekly basis, significantly higher than the current weekly full-time wage for the highest classification in the Award. The Award covers only those employees who are wholly or principally engaged in ‘clerical work’ (defined in cl 2 to include ‘recording, typing, calculating, invoicing, billing, charging, checking, receiving and answering calls, cash handling, operating a telephone switchboard, attending a reception desk and administrative duties of a clerical nature’). We do not consider that Ms Henderson performs clerical work.
It was not suggested, and we cannot identify, that any other modern award covers Ms Henderson’s employment. Accordingly, she is not an award covered employee, and subitem (8) cannot apply to her. Subitems (7) and (9) are clearly not applicable. Ms Henderson’s application therefore falls to be considered under subitem (6)(b).
Ms Henderson seeks that the default period for her AWA should be extended so that she retains the long service leave and redundancy entitlements in the AWA. Clause 3.4.5 of the AWA provides for long service leave of three months after 10 years’ service whereas, Ms Henderson contends, SSA’s other employees are only entitled to two months’ leave after 10 years’ service (as per the Long Service Leave Act 1955 (NSW)). Clause 5 of the AWA provides for an uncapped severance pay entitlement. Ms Henderson is not entitled to the less‑beneficial redundancy pay entitlement in s 119 of the FW Act because SSA is a ‘small business employer’ (see ss 23 and 121(1)(b) of the FW Act). However, the circumstances in which the entitlement in clause 5 of the AWA arises are unclear, because clause 5 provides that it applies ‘[i]f the Company terminates this Agreement by virtue of it no longer requiring the position’ (underlining added). Read literally, this would mean that if SSA terminates Ms Henderson’s employment without terminating the AWA, the entitlement would not apply. However, we accept that contextual consideration might arguably lead to clause 5 being construed in a more beneficial way. Ms Henderson submitted that the retention of the redundancy entitlement is important to her:
I am appealing to Fair Work to allow my AWA entitlements to be extended as this is of great consequence to me and would provide protection if my role were to be made redundant, or the company wound up. The company has been the subject of a number of reviews in the past, and is almost completely reliant on the ongoing support of its six members. These members are the six state symphony orchestras, which themselves are not for profit companies that rely on government grants and box office sales for their own revenue. COVID-19 affected them badly and they are still recovering. While there is no current threat of the company being wound up, it is always a possibility and my redundancy provisions are therefore valuable to me.
SSA, through its CEO Ms Lidbetter, made the following written submission:
As outlined in the hearing, Symphony Services Australia is a not-for-profit company limited by guarantee. Dilek and I report to a board which comprises the CEOs of our members, the six state symphony orchestras. These member orchestras contribute the vast majority of the company’s annual revenue via service fees. We are reliant on the ongoing fees of our members, and they themselves rely on generating revenue through box office (severely impacted from 2020 onwards due to COVID) and their [S]tate and federal government grants. At various times in the history of the organisation there have been discussions regarding the future of Symphony Services Australia and in 2019 we were substantially downsized to our current small number (3.7 FTE employees). There is always the possibility of the company being wound up if the members decide they no longer require our services, and a company of our size would not be required under the Fair Work Act to pay redundancies to staff. Dilek’s AWA redundancy clause therefore provides her with valuable protection. Her Long Service Leave provision is also more generous than that required under the Act.
Dilek is a senior and highly valued member of the SSA team, however her remuneration reflects her part-time status within a not-for-profit arts company and is well below an equivalent salary in the private sector.
The Chair of our board supports Dilek’s request for an extension, as do I. If the extension is not granted, the board would presumably negotiate a new contract with Dilek and it is possible she would not be offered any benefits beyond those required by law. She would prefer to avoid such a negotiation if possible.
In her oral submissions at the preliminary hearing on 16 June 2023, Ms Lidbetter additional submitted that Ms Henderson was an ‘extremely valued employee’ who ‘shouldn’t be penalised in any way’ by the sunsetting of zombie agreements. Asked about the prospect of the AWA being replaced by a new employment contract in the same or similar terms, Ms Lidbetter said that she thought ‘it possibly could’ and that while she could not guarantee it, she would recommend to the Board that there be no change in Ms Henderson’s conditions. As to the prospect of Ms Henderson being made redundant in the future, Ms Lidbetter said this was possible but not probable.
It is apparent that that Ms Henderson and SSA have no plan to transition to a contemporary employment arrangement but rather seek the extension of the AWA for the maximum time available as a matter of convenience. As stated in the Full Bench decision in Northern Inland Credit Union Limited,[2] we do not consider that it is consistent with the statutory intention to sunset transitional instruments as the default position that an AWA should be allowed to continue to operate merely because the parties agree that this should occur, absent any other relevant consideration which would render it reasonable to do so. The only consideration raised in this case is the benefit which Ms Henderson will obtain from the continuation of the long service leave and redundancy pay entitlements in the AWA. However, as SSA positively supports the extension of the AWA, which would result in the continuation of these entitlements, we see no reason why it would not equally, and readily, agree to a new employment contract with Ms Henderson containing these entitlements. The proposition that SSA is happy for the AWA to continue but might seek to exclude these entitlements from any new employment contract is incongruous and lacking in credibility. The drafting and execution of a new employment contract between Ms Henderson and SSA containing the same entitlements to long service leave and redundancy pay would be a straightforward matter to be undertaken prior to the sunsetting date of 6 December 2023. Additionally, it would provide an opportunity to correct the drafting anomaly in clause 5 of the AWA which we have earlier identified.
We are not satisfied, for the purpose of item 20A(6)(b), that it is reasonable in the circumstances to extend the default period for the AWA between Ms Henderson and SSA. Accordingly, the application is dismissed.
PRESIDENT
Appearances:
D Henderson, the applicant, in person.
K Lidbetter, for Symphony Services Australia Ltd.
Hearing details:
2023.
Video using Microsoft Teams:
16 June.
[1] [2023] FWCFB 105 at [3]-[18].
[2] [2023] FWCFB 120 at [23].
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