Dexalaw Pty Ltd T/A Hanchard Crane Hire

[2018] FWCA 2882

[2018] FWCA 2882

FAIR WORK COMMISSION

DECISION

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

Dexalaw Pty Ltd T/A Hanchard Crane Hire
(AG2018/1935)

DEXALAW PTY. LTD. T/A HANCHARD CRANE HIRE AND CFMEU UNION COLLECTIVE AGREEMENT 2015 - 2019

Building, metal and civil construction industries
COMMISSIONER HUNT	BRISBANE, 20 JUNE 2018

Application for termination of the Dexalaw Pty. Ltd. T/A Hanchard Crane Hire and CFMEU Union Collective Agreement 2015 - 2019.

[1] On 10 May 2018 Dexalaw Pty Ltd T/A Hanchard Crane Hire (the Employer) applied pursuant to s.222 of the Fair Work Act 2009 (the Act) to terminate the Dexalaw Pty. Ltd. T/A Hanchard Crane Hire and CFMEU Union Collective Agreement 2015 - 2019 (the Agreement).

[2] The application was supported by a statutory declaration of Mike Hanchard, Owner, which declared, among other things, that the employees covered by the Agreement were notified of the time and place of the vote and that of the valid votes cast, a majority of the employees approved the termination of the Agreement.

[3] The Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) is an employee organisation which is covered by the Agreement. The CFMMEU opposes the application.

[4] Both parties filed written submissions in relation to the concerns raised by the CFMMEU. The Employer advised its preference for the application to be dealt with on the papers. The CFMMEU elected not to provide its preferences with respect to being heard. Accordingly I am satisfied that a hearing is not required and I consider it appropriate to deal with the application on the papers.

Applicable Legislation

[5] Section 223 of the Act is as follows:

'223 When the 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.’

CFMMEU Submissions

[6] The CFMMEU submitted that the Fair Work Commission (the Commission) must only approve the application for termination if it considers it appropriate to do so, taking into account the views of the CFMMEU.

[7] The CFMMEU acknowledged that the motivation by the Employer for termination of the Agreement is to seek compliance with the Code for the Tendering and Performance of Building Work 2016 (the Code), and the Employer’s desire to tender and perform Commonwealth-funded building work. The CFMMEU noted, however, that the application is not accompanied by an application to replace the Agreement nor is there progress afoot to have a new enterprise agreement apply.

[8] The CFMMEU contended that whilst s.223 of the Act does not mandate that an application for termination must be accompanied by an application for approval of a replacement agreement, the absence of a proposed replacement agreement may result in employees being significantly worse off as a consequence of termination of the Agreement as the employees will revert to the lesser conditions of the Mobile Crane Hiring Award 2010 (the Award).

[9] The CFMMEU submitted that whilst the Employer might have made representations to honour the terms of the Agreement by putting in place common law contracts, there remains a want of enforceability of any such representations. Further, in the event of any representations about honouring any aspect of the Agreement if the Agreement is approved for termination, this may in any event cause the Employer to fall foul of s.10 of the Code which prohibits Code-covered entities from making or implementing an agreement in respect of building work that deals with matters are prohibited by s.11 of the Code.

[10] Section 11 of the Code imposes broadly drafted prohibitions, including on the imposition of “limits on the right of a code-covered entity to manage its business or to improve productivity”.

[11] The CFMMEU contended the Employer would be prudent to finalise its industrial arrangements prior to termination of the Agreement, and in a way that maintains the entitlements of its employees in a Code-compliant manner. The Employer has not demonstrated it has done this, and to that extent the application to terminate the Agreement is speculative. Accordingly, it was submitted the Commission cannot be satisfied that it is appropriate to terminate the Agreement.

Employer’s Submissions

[12] The Employer submitted that the requirements of ss. 223(a)-(c) of the Act are met and are evidenced in the application forms. With respect to the views of the CFMMEU, the Employer submitted that none of the concerns raised by the CFMMEU raise issues that are requirements under the Act for the termination of the Agreement. The affected employees have themselves determined that they agree to the termination of the Agreement.

[13] The Employer contended that nonetheless it has put in place common law contracts for all employees who voted on the termination of the Agreement. The common law contracts provide for preservation of the employees’ existing rates, terms and conditions. The common law contract is both enforceable at law and is also exempt from falling foul of the Code by virtue of s.10(2) of the Code.

[14] The Employer submitted the CFMMEU have provided no evidence that the employees want an enterprise agreement to apply to their employment. To the contrary, the fact that the employees have overwhelmingly voted to terminate the Agreement is evidence on itself that the employees do not agree with the CFMMEU’s assertions in this regard.

Consideration

[15] The CFMMEU have acknowledged that there is no requirement for there to be a replacement agreement in order for this application to succeed. Rather, the CFMMEU’s primary argument is founded on alleged disadvantage to employees and lack of enforceability of rights in the event the Agreement is terminated.

[16] The Employer has elected, at its discretion and without obligation, to maintain the existing employees’ rates and conditions under contracts enforceable at common law.

[17] Section 10 of the Code relevantly states:

“10 Unregistered written agreements and other agreements

(1) A code covered entity must not bargain in relation to an agreement, make an agreement, or implement an agreement in respect of building work:

(a) that deals with matters that would be not be permitted by section 11 to be included in the agreement if the agreement were an enterprise agreement; or

(b) that provides for terms, conditions or benefits of employment of employees of the employer or the employer’s subcontractors (which may include above-entitlements payments); or

(c) that restricts or limits the form or type of engagement that may be used to engage subcontractors; and

(d) that either:

(i) will not be registered, lodged or otherwise approved under the FW Act; or

(ii) the code covered entity reasonably believes will not be registered, lodged or otherwise approved under the FW Act.

(2) Subsection (1) does not apply to an agreement that is a common law agreement made between an employer and an individual employee or to an individual flexibility arrangement.” (emphasis added)

[18] It is evident from the above extract that the CFMMEU’s concern about the Employer’s ability to obtain Code-compliance is not well-founded. The Employer’s arrangements to preserve the employees’ entitlements at common law are exempt by virtue of s.10(2) of the Code.

[19] Taking into account the material before the Commission, and the CFMMEU’s view about the matter, I consider it is appropriate to approve the termination of the Agreement. In this particular circumstance I would reach the same conclusion irrespective of the Employer’s decision to make common law agreements with its employees.

[20] I am satisfied that the requirements of s.223 of the Act have been met. In accordance with s.223, I must terminate the Agreement. The application to terminate the Agreement is approved.

[21] The termination will take effect from today, 20 June 2018.

COMMISSIONER

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