Crescent Head Community Pre School
[2022] FWC 3237
•5 DECEMBER 2022
[2022] FWC 3237
The attached document replaces the document previously issued with the above code on 5 December 2022.
Incorrect MNC [2022] FWCA 4267 changed to correct MNC [2022] FWC 3237.
Alana Spensley-Armstrong
Associate to Commissioner Ryan.
Dated 8 December 2022.
| [2022] FWC 3237 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.225—Enterprise agreement
Crescent Head Community Pre School
(AG2022/3111)
Crescent Head Community Pre-School Employee Collective Agreement 2014
| Educational services | |
| COMMISSIONER P RYAN | SYDNEY, 5 DECEMBER 2022 |
Application for termination of the Crescent Head Community Pre-School Employee Collective Agreement 2014
Introduction
Crescent Head Community Pre-School (Applicant) made an application to the Fair Work Commission to terminate the Crescent Head Community Pre-School Employee Collective Agreement 2014 (Agreement) pursuant to s.225 of the Fair Work Act 2009 (FW Act).
The Agreement covers the Applicant and its employees who are employed as childcare employees, teachers and directors.
Subdivision D of Division 7 of Part 2-4 of the FW Act applies in relation to the termination of an enterprise agreement after its nominal expiry date and provides as follows:
‘Subdivision D—Termination of enterprise agreements after nominal expiry date
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.’
The matter was listed for hearing on 26 October 2022. Ms Melissa Timmins and Ms Bianca Hopper-Buckland appeared for the Applicant. Mr Neal Bent appeared for the Independent Education Union of Australia (IEU).
The hearing proceeded by way of oral submissions, supplementing the materials filed by the parties.
For the reasons that follow, I have decided to refuse the application.
The Agreement
The Agreement commenced on 10 June 2014 and passed its nominal expiry date 10 June 2017. The Agreement covers the IEU.
There are currently six employees to whom the Agreement applies.[1] Noting the classifications of those employees, if the Agreement is terminated, the terms and conditions of the Children’s Services Award 2020 (Children’s Services Award) will apply.
Schedule 1 to Agreement sets out the wage rates and allowances and includes a mechanism for wages to be adjusted on an annual basis by the same percentage that the Commission determines as part of its annual wage review or 2%, whichever is greater.
In relation to personal leave, the Agreement provides for 15 days of leave in the first year of service and 12 days in each subsequent year for employees other than teachers, while teachers receive 15 days of leave in the first year of service and 25 days in each subsequent year, up to a maximum accrual of 120 days.
The casual loadings under the Agreement are 30% for non-contact employees, 25% for childcare employees and 26% for teachers.
The public interest
In Wollongong Coal Limited T/A Wollongong Coal[2] (Wollongong Coal) the Full Bench summarised the public interest consideration as follows[3]:
[10] In relation to the public interest consideration in s. 226(a) the Commission is not required to be satisfied that termination of an agreement is in the public interest but rather, that it is not contrary to the public interest – a lower threshold. There is no predisposition that the termination of an enterprise agreement that has passed its nominal expiry date is contrary to the public interest. Public interest is distinct from the interests of the parties, notwithstanding that the public interest and the interests of the parties may be simultaneously affected. Where the termination of an enterprise agreement will have no effect on anyone other than the parties, it is likely not to be considered contrary to the public interest.
The Applicant submitted the following reasons for making the Application: that the Agreement has passed its nominal expiry date; that the Agreement has not been reviewed since its implementation; and that the Applicant’s current management committee and employees consider the terms and conditions of the Children’s Services Award, along with the National Employment Standards (NES), provide a more appropriate set of terms and conditions for the Applicant and its employees.
The Applicant submitted that it has ‘grandfathered’ those terms and conditions of the Agreement that are more favourable than the modern award, and that supports a conclusion that the termination of the Agreement is not contrary to the public interest.
As the Full Bench stated in Wollongong Coal, where the termination of an enterprise agreement will have no effect on anyone other than the parties, it is likely not to be considered contrary to the public interest.[4]
It is clear on the materials before me that the termination of the Agreement will have no effect on anyone other than the parties. Accordingly, I am satisfied that the termination of the Agreement is not contrary to the public interest.
The views of the Applicant
As set out above, the Applicant submitted the following reasons for making the Application: that the Agreement has passed its nominal expiry date; that the Agreement has not been reviewed since its implementation; and that the Applicant’s current management committee and employees consider the terms and conditions of the Children’s Services Award, along with the NES, provide a more appropriate set of terms and conditions for the Applicant and its employees.
The Applicant submitted that there was a general concern amongst the Applicant’s management committee that the Agreement is not reviewed on a regular basis to remain current, and that it and the employees would be more ‘comfortable’ knowing the terms and conditions of employment are regulated by the Children’s Services Award and the NES.
The Applicant submitted that the more favourable personal leave provisions and the wage rate increase mechanism have been ‘grandfathered’ for each of the employees in an updated employment contract. The contracts of employment were filed as part of the Applicant’s materials.
The Applicant stated that they have met with all the employees and explained the application and how the termination of the Agreement will impact them. The Applicant filed a copy of the minutes of the meeting.
The views of the employees
While the directions issued by the Commission were served on the employees and provided them with an opportunity to file any materials setting out their views, there was no direct evidence or submissions filed by any of the employees.
The views of the IEU
The IEU submitted that the Applicant has not provided cogent reasons supporting the termination of the Agreement.
The IEU further submitted that the terms of the contract ‘grandfathering’ the Agreements wage adjustment mechanism was contradictory and that the impact of the termination of the agreement on the affected employees far outweighs the impact on the Applicant.
Is it appropriate to terminate the Agreement?
The minutes of the meeting with the employees’ record that all entitlements in the Agreement that are more favourable will be ‘grandfathered’. While the more favourable personal leave entitlements have been incorporated into the updated contracts of employment, the contractual provisions relating to wage rates and the adjustment of wage rates do not preserve or ‘grandfather’ the provisions in the Agreement.
Pursuant to Schedule 1 of the Agreement, the wage rates in the Agreement are adjusted on an annual basis by the same percentage that the Commission determines as part of its annual wage review or 2%, whichever is greater.
However, the term of the contract of employment which was inserted to ‘grandfather’ the wage rate provision in the Agreement provides as follows:
“7. Wage review
The rates of pay are payable from the first full pay period on 1 July 2013 and shall be increased from the first full pay period on or after 1 July in each subsequent year by the amount that the Fair Work Commission has determined as the increase to the minimum wage. Staff elected to take the wage case decision that is handed down in July each year or 2% increase in wages, whichever is greater. As your rate is an over award rate, any Fair Work Commission Wage Determination that is increased throughout the year will need to be reviewed accordingly. An increase in salary at this time is not guaranteed, provided that you will be paid at least the minimum Award rate of pay.”
(Bold in original)
While the Agreement provides for a minimum increase to the Agreement’s wage rates of 2% each year, the contract of employment removes the entitlement to an increase if the rate of pay is at least equal to the base rate of pay in the Children’s Services Award.
In circumstances where it is apparent from the materials filed that each of the employees currently receive a base rate of pay that is higher than the base rate of pay that would be payable under the Children’s Services Award, the wage review clause in the contract of employment represents a reduction in the terms and conditions of employment of the employees by permitting the employer to freeze the employees’ rate of pay until the modern award ‘catches up’.
In Wollongong Coal, the Full Bench stated:
“Relevant considerations relating to the appropriateness of the termination of an enterprise agreement may include:
·The length of time since the nominal expiry date of the enterprise agreement;
·The number of employees affected by the proposed termination;
·The reduction or absence of reduction in terms and conditions of employment; and
·The presence or absence of proper industrial standards for employees.[5]
(Emphasis added).
In circumstances where the employees were informed that the more favourable conditions in the Agreement will be ‘grandfathered’ (as reflected in the minutes), I am not satisfied that it is appropriate to terminate the Agreement.
Conclusion
For the reasons set out above, the application to terminate the Agreement is dismissed.
COMMISSIONER
Hearing details:
2022.
Sydney (via Microsoft Teams):
26 October.
[1] See s.52 of the FW Act.
[2] [2021] FWCFB 2161.
[3] Citing Re Kellog Brown and Root, Bass Strait (Esso) Onshore/Offshore Facilities Certified Agreement 2000 (2005) 139 IR 34 at 40 and Re Sedgman Employment Services Pty Ltd Bowen Basin Front Line Employee Enterprise Agreement 2011 – 2014 [2016] FWCA 1595 at [53].
[4] Wollongong Coal at [10].
[5] Wollongong Coal at [13].
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