Davmar Unit Trust (The Trustee for) T/A Davmar Bricklaying & Building Pty Ltd

[2020] FWCA 1237

[2020] FWCA 1237

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.225 - Application for termination of an enterprise agreement after its nominal expiry date

Davmar Unit Trust (The Trustee for) T/A Davmar Bricklaying & Building Pty Ltd
(AG2019/4419)

DAVMAR UNIT TRUST (THE TRUSTEE FOR) T/AS DAVMAR BRICKLAYING & BUILDING PTY LTD AND THE CFMEU (VICTORIAN CONSTRUCTION AND GENERAL DIVISION) ENTERPRISE AGREEMENT 2016-2018

Building, metal and civil construction industries
COMMISSIONER LEE	MELBOURNE, 6 MARCH 2020

Application for termination of the Davmar Unit Trust (The Trustee for) T/As Davmar Bricklaying & Building Pty Ltd and the CFMEU (Victorian Construction and General Division) Enterprise Agreement 2016-2018.

[1] This matter involves an application made by Davmar Unit Trust (The Trustee for ) T/A Davmar Bricklaying & Building Pty Ltd(the Applicant) for termination of the Davmar Unit Trust (The Trustee for) T/As Davmar Bricklaying & Building Pty Ltd and the CFMEU (Victorian Construction and General Division) Enterprise Agreement 2016-2018(the Agreement) pursuant to section 225 of the Fair Work Act 2009 (the Act).

[2] The Agreement is an enterprise agreement made pursuant to s. 185 of the Act and has a nominal expiry date of 30 June 2018.

[3] The matter for determination is whether or not to grant the application to terminate the agreement.

Background to the application

[4] The nominal expiry date of the Agreement is 30 June 2018. There are seven employees covered by the Agreement and the Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) is covered by the Agreement.

[5] A statutory declaration was made by Mr Martin Rainford, Director of the Applicant, which accompanied the application. Relevantly, Mr Rainford, stated that it is not contrary to the public interest to terminate the agreement as “the public in general are not effected by my agreement as we work solely in the commercial construction industry.” The primary activity of the Applicant is commercial construction of permanent formwork structural walls.

[6] As to the effect of the termination of the Agreement, Mr Rainford submitted that the termination of the Agreement would:

“Allow my business to be more competitive in tendering and winning work in the permanent formwork system market.

A small market with only 5 or 6 businesses installing the wall systems.

None of the other business have an EBA Agreement and their overheads compared to mine make it very difficult for my business to win work for my employees at a rate that covers all the terms of my current EBA.”

[7] Having regard to the fact that the CFMMEU is covered by the Agreement my Chambers wrote to the CFMMEU asking for them to advise as to whether the CFMMEU consented or objected to the application to terminate the Agreement. In response, Ms Cavallaro of the CFMMEU replied indicating that the CFMMEU did not wish to make any submissions in relation to the application.

[8] After considering the material filed, I determined that I required further information on the circumstances and views of employees before I could make a decision as to whether to terminate the Agreement.

[9] I requested that the Fair Work Commission’s Agreements team undertake an analysis of the effect of the termination of the Agreement, assuming that the employees continuing entitlement in the absence of the Agreement would be the relevant award, the Building And Construction General On Site Award 2010(the Award). That information was forwarded to the Applicant for their consideration. The analysis revealed that the Agreement contained substantial benefits in excess of the relevant Award entitlements.

[10] Subsequently, the matter was listed for a mention hearing on 29 January 2020.

[11] Prior to the mention hearing, Mr Rainford provided the following information:

•  The Applicant has been required in recent years to develop relationships with non- enterprise bargaining agreement (EBA) builders as a result of the two EBA builders that the Applicant had good relationships with, no longer being available as customers;

•  In that changed environment, the Applicant is struggling to win work and have undertaken work either losing money or making small margins;

•  This situation cannot continue and this is the basis for seeking to terminate the Agreement; and

•  That he has advised the CFMMEU of the position and that they understand the situation.

[12] Mr Rainford advised that he has spoken to his employees and advised them that his aim is to minimise the impact on them and undertakes to maintain a number of the Agreement’s benefits for current employees in the event the Agreement is terminated as follows:

“We agree to maintaining the following

•  Termination prior to a Public Holiday. Clause 17.4 provides if an employee is terminated the employer will pay the employers ordinary wages for each Public Holiday prescribed which falls within 10 calendar days after the employee is terminated.

•  Income protection insurance. Clause 23.8 and in general the redundancy fund at clause 23.

Incolink have advised that as a Non EBA entity we can continue to pay into the fund for our employees the monthly redundancy payment. They however cannot provide Income protection. I have sourced this with my Insurance Broker for each employee and it will be tailed to their individual lifestyles.

•  Five days of personal/carers leave is credited upfront at clause 40.4

•  Family and domestic violence leave is ten paid days per year at clause 45.5

•  More beneficial allowances

•  36 ordinary hours per week

•  0.8 hours per day accruing towards an RDO

•  Min 8 hours for casual employees; Casual conversion to daily hire after 6 weeks.

We don’t engage casual labour,but agree to the above clause should this change.

•  All shiftwork, weekend work and overtime paid at 200%

Agreement reductions in comparison to the Award

•  Annual leave loading does not include shift or weekend penalties where these are greater than 17.5%

We will continue to pay Leave Loadings as per the EBA conditions

•  Crib time is paid at ordinary rates

We will continue to pay Crib time as per the EBA conditions

•  Building industry picnic day at clause 46

We will allow any employee who wishes to attend the picnic to do so , using a RDO or Annual Leave day.

We will, unlike the EBA conditions, not require them to provide proof of attendance to the picnic to receive payment.

•  Pay Rates and Travel allowances

It is not our intention to reduce any current employees pay rates or travel allowance or place them on an award rate. Most of my employees have been very loyal over many years with some having been in our employee for over 10 years.

I fully understand that these people have financial commitments that would be impacted by a change to the award rate. They shall maintain their current rates and allowances.” 1

[13] At the mention hearing, Mr Rainford confirmed his commitment to minimise the impact on his current employees, who he considers very loyal and committed employees he wants to retain. In the future, if new employees were engaged Mr Rainford seeks the flexibility to not employ those employees on the Agreement rates. During the mention, Mr Rainford provided the following context:

“the hardest thing for us as a business at the moment is winning work at a rate that we can cover our overheads, because we've had to fall back into this sort of whole tier 4 and 5 and 6 builders who - you know, they're not up there with the tier 1 and 2 and 3 guys, and we are struggling to win work and then win it at a decent rate, and, you know, I really need to try and chop some overheads where I can just to keep the guys working and keep the ball rolling along, and that's really the only reason I want to terminate the EBA.” 2

[14] Subsequent to the mention hearing and with the agreement of Mr Rainford, I issued correspondence to the Applicant indicating that they should take the following action in order for me to obtain information on the views and circumstances of employees:

“The views and circumstances of employees are to be obtained by the employer forwarding or handing to employees the following notice by no later than close of business Friday, 7 February 2020:

“An application has been made by Davmar Unit Trust (The Trustee for) T/A Davmar Bricklaying & Building Pty Ltd to terminate the Davmar Unit Trust (The Trustee for) T/A Davmar Bricklaying & Building Pty Ltd and the CFMEU (Victorian Construction and General Division) Enterprise Agreement 2016 - 2018.

The matter has been allocated to Commissioner Lee of the Fair Work Commission for determination.

If the application to terminate the Davmar Unit Trust (The Trustee for) T/A Davmar Bricklaying & Building Pty Ltd and the CFMEU (Victorian Construction and General Division) Enterprise Agreement 2016 – 2018 is successful, your minimum employment entitlements will be regulated by the applicable modern award. This will have an effect on theterms and conditions of employment to which you are entitled.

Commissioner Lee, when determining whether to terminate the agreement, is required to take into account the views of employees covered by the agreement.

If you have any views about the application to terminate the agreement, please advise the Commissioner by email at [email protected] or by calling [phone]. Views are to be provided to the Fair Work Commission by close of business Friday, 21 February 2020.”

The Commissioner will take into account any views of employees provided when deciding whether or not to terminate the Agreement.

Once this course of action is followed, the Commissioner asks that the employer include in a statutory declaration, the following information:

•  Advice as to when and how the notice was distributed to employees.

The Commissioner has asked that a statutory declaration including the above information please be provided as soon as possible, but by no later than close of business Friday, 21 February 2020.

At the Mention Hearing, you indicated an intention to maintain certain conditions of employment for employees by way of common law contracts. Please refer to and include any evidence of actions you have taken in this regard with your statutory declaration. The Commissioner will take into account any material provided in his consideration as to whether or not to terminate the Agreement.”

[15] Subsequently, on 6 February 2020, I received a copy of a statutory declaration from Mr Rainford of the Applicant in the following terms:

“I have distributed the attached Letter and draft Letter of Engagement to Davmar Bricklaying Employees and made them aware that they can contact FWC via email or phone as detailed on the attached letter to voice any views they have in respect to the application to terminate the agreement.

The letters were hand delivered to the employees by myself at there workplace on Monday 3^rd Feb 2020.

Each employee has read both letters and I explained any queries they had.

I also made note that they should call or email FWC if they had any concerns.”

[16] I note that my Chambers has not received any emails from any employee of the Applicant expressing any view about the application to terminate the Agreement.

Mr Rainford also provided a copy of the model contract of employment that will be offered to employees in the event that that Agreement is terminated. The terms of the contract provided include that remuneration would stay consistent with the current Agreement rates.

Consideration

[17] In making a decision whether to grant the application, the Fair Work Commission is required to comply with section 225 and section 226 of the Act.

“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.”

[18] The application to terminate the agreement was made by the employer, Davmar Unit Trust (The Trustee for) T/A Davmar Bricklaying & Building Pty Ltd, who is covered by the Agreement consistent with s. 225(a) of the Act.

[19] In the event the Agreement is terminated, it is apparent that there will be a significant reduction in the statutory entitlements of employees. However, I have been advised by Mr Rainford in a statutory declaration that he has supplied employees with a draft letter of engagement, which consistent with submissions he has made to me, will have the effect of broadly maintaining current employees remuneration consistent with the current Agreement rates. In the circumstances, I am satisfied that while there will be some impact on employees if the Agreement is terminated, that impact will be minimised.

[20] No submissions that the termination of the Agreement would be contrary to the public interest have been received. I have taken into account the changed business environment confronting Mr Rainford and this weighs in favour of a decision to terminate the Agreement.

[21] The CFMMEU, who are covered by the Agreement and are aware of the application before me, have not participated in the proceedings and have not made any submissions on the matter.

[22] The views of employees have been sought through the distribution of a notice advising of the changes in the terms and conditions of their employment, consistent with the statement and directions I issued. I have received a statutory declaration from Mr Rainford, referred to above, which states that the notice was individually distributed to employees. No views of any employee covered by the Agreement have been forwarded to my Chambers.

[23] I am satisfied, in accordance with s. 226 (a) of the Act, that it is not contrary to the public interest to terminate the Agreement. I am also satisfied, in accordance with s. 226 (b) of the Act that it is appropriate to terminate the Agreement having regard to all of the circumstances of the matte as set out above. I am therefore required by s. 226 of the Act to terminate the Agreement.

[24] The termination of the Agreement shall operate from the date of this decision.

COMMISSIONER

 1   28 Jan corro

 2   PN58.

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