DJM Fabrications (VIC) Pty Ltd

[2020] FWCA 6293

[2020] FWCA 6293

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.225—Enterprise agreement

DJM Fabrications (VIC) Pty Ltd
(AG2020/3282)

Manufacturing and associated industries
DEPUTY PRESIDENT CLANCY	MELBOURNE, 25 NOVEMBER 2020

Application for termination of the DJM Fabrications (Vic) Pty Ltd Enterprise Agreement 2011.

[1] On 30 October 2020, DJM Fabrications (VIC) Pty Ltd (DJM Fabrications) filed an application (the Application) pursuant to s.225 of the Fair Work Act 2009 (the Act) to terminate the DJM Fabrications (Vic) Pty Ltd Enterprise Agreement 2011 (the Agreement). The Application was accompanied by a statutory declaration of Ms Lauren Sheehan, HR Manager for DJM Fabrications, dated 30 October 2020, and the following annexures:

•  A letter dated 18 September 2020 with the subject line “RE: Termination of DJM Fabrications Pty Ltd Enterprise Agreement 2011”; and

•  13 ballot papers signed by employees supporting the Application.

[2] On 5 November 2020, I issued directions requiring DJM Fabrications provide all employees covered by the Agreement a copy of the directions, the Application, the statutory declaration made by Ms Sheehan, the letter dated 18 September 2020 and the 13 ballot papers by way of email or by way of posting the material on the staff notice board. Employees covered by the Agreement were invited to file any material in response to the Application by 4:00PM on 18 November 2020.

[3] On 10 November 2020, I issued amended directions inviting employees covered by the Agreement to file any material in response to the Application by 4:00PM on 19 November 2020.

[4] Also on 10 November 2020, Ms Sheehan emailed my chambers advising that DJM Fabrications had complied with my amended directions by way of verbally communicating to staff in a meeting held that morning and displaying the documents in all lunch rooms.

[5] No employees filed any material in response to the Application by 4:00PM on 19 November 2020.

Legislation

[6] The Act relevantly provides as follows:

“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.”

Lauren Sheehan’s statutory declaration

[7] Ms Sheehan declared that there are 21 employees currently covered by the Agreement, however, that the termination of the Agreement is not contrary to the public interest as it expired on 1 July 2015 and is no longer of any benefit to its employees or to DJM Fabrications. She further says that the terms and conditions are outdated, where employees of DJM Fabrications would be better off covered under the modern award conditions.

[8] Ms Sheehan made reference to terms that are covered by the Agreement but not by the modern award nor the National Employment Standards, namely:

•  How RDOs can be taken;

•  Safety clothing and PPE; and

•  Onsite allowances.

[9] She says that these conditions have since been implemented into DJM Fabrications’ policies following review and consultation with staff, and that they will continue to be of benefit to employees following the termination of the Agreement.

[10] Ms Sheehan declares that all employees covered by the Agreement have participated in multiple consultation forums and have been provided with written correspondence and a copy of the Agreement. She says that each employee has been provided with the opportunity to discuss and express any concerns they may have about the termination of the Agreement. Ballot papers were distributed to the 21 employees which resulted in the following outcomes:

•  12 employees support the termination of the Agreement;

•  1 employee does not support the termination of the Agreement; and

•  8 employees have not responded.

[11] Ms Sheehan says that during the bargaining for the Agreement and throughout the duration of the Agreement, there was no union involvement and that no union is covered by the Agreement. Further, she declares that throughout the duration of the Agreement, more than half of the current employees covered by the Agreement were not employed at the time. In fact, she says that only five employees currently covered by the Agreement were employed at the Agreement’s inception, one current employee was employed after the Agreement came into force, and the 15 remaining current employees were recruited following the Agreement’s nominal expiry date in 2015.

[12] Ms Sheehan says that termination of the Agreement will create greater individual flexibility and less ambiguity for DJM Fabrications and its employees.

Consideration

Section 225

[13] I am satisfied that DJM Fabrications, as the employer covered by the Agreement is eligible to apply to the Commission for the termination of the Agreement under s.225(a) of the Act. I am also satisfied that the Agreement has passed its nominal expiry date of 1 July 2015.

Section 226(a) – Public Interest

[14] Having regard to s.226(a) of the Act and the manner in which the public interest is to be assessed, the Full Bench in Aurizon Operations Limited; Aurizon Network Pty Ltd; Australian Eastern Railroad Pty Ltd 1(Aurizon)cited various passages from the Full Bench of the Australian Industrial Relations Commission’s decision in Re Kellogg Brown and Root, Bass Strait (Esso) Onshore/Offshore Facilities Certified Agreement 20002(Kellogg) which had concerned the corresponding, but not identical, provision from the Workplace Relations Act 1996. Relevantly, these passages included:

“The notion of public interest refers to matters that might affect the public as a whole such as the achievement or otherwise of the various objects of the Act, employment levels, inflation, and the maintenance of proper industrial standards. An example of something in the last category may be a case in which there was no applicable award and the termination of the agreement would lead to an absence of award coverage for the employees. While the content of the notion of public interest cannot be precisely defined, it is distinct in nature from the interests of the parties. And although the public interest and the interests of the parties may be simultaneously affected, that fact does not lessen the distinction between them…” 3

[15] It is also relevant to highlight the Full Bench in Aurizon concluded that it cannot be expected that the terms and conditions of an agreement will continue unaltered in perpetuity after it has passed its expiry date. This is because the Act contemplates the terms and conditions of an agreement may be altered by making a new agreement or by terminating the existing agreement. 4

[16] As was also recognised in Aurizon, s.226 of the Act is not limited to circumstances in which an agreement no longer applies to any employee. The Act clearly contemplates an agreement that still applies to employees being terminated and prescribes a safety net upon termination in such circumstances. The prescribed safety net is not a prior agreement and nor are undertakings mandatory. Rather, the prescribed safety net is the relevant modern award created during the Award Modernisation process and the National Employment Standards (NES). In this case, the relevant modern award is the Hospitality Industry (General) Award 2010 (the Award).

[17] In this Application, the termination of the Agreement would not lead to an absence of award coverage for the employees. The Award provides for “proper industrial standards” within the meaning given to that term by Kellogg.

[18] In circumstances where there was no material before me suggesting otherwise, I am satisfied it is not contrary to the public interest to terminate the Agreement.

Section 226(b) – Appropriateness

[19] The approach to assessing appropriateness by taking into account all the circumstances, as enunciated by the Full Bench in Aurizon, is to have reference to the construction of s.226 and the contextual matters that bear upon that construction, as well as giving specific consideration to the matters identified in ss.226(b)(i) and (ii):

“All of the circumstances also need to be taken into account in considering whether termination of the agreements is appropriate. In particular the views of employers and employees covered by the agreement, their circumstances, and the impact of termination need to be taken into account. The requirement in s. 226(b) to take into account all of the circumstances including those set out in s. 226(b)(i) and (ii) is a requirement to take the matters into account and to give them due weight in assessing whether it is appropriate to terminate an enterprise agreement. In assessing appropriateness by taking into account all of the circumstances, we approached the task by reference to the construction of s. 226 and the contextual matters that bear upon that construction dealt with earlier as well as giving specific consideration to the matters identified in s . 226(b)(i) and (ii).” 5 (Reference omitted)

[20] I intend to adopt this approach.

[21] As the employer, DJM Fabrications filed the Application to terminate the Agreement. Clearly, it supports the Agreement being terminated. Ms Sheehan did not declare the effect of terminating the Agreement on DJM Fabrications, other than that it will create greater individual flexibility and less ambiguity for the business and its employees. However, she did declare that DJM Fabrications consulted with its employees about the effect of terminating the Agreement on them, that 12 employees supported the termination of the Agreement and only one employee did not support the termination of the Agreement.

[22] There is no employee organisation covered by the Agreement.

[23] I am satisfied the employees were on notice as to the Application before me and had a reasonable period of time to file material should they have wished to do so. While no submissions from any employees were filed in the Commission, I have noted that 12 employees support termination and the one employee who did not support termination has not filed any material in response to my directions. As to the eight employees covered by the Agreement who did not respond, I am prepared to conclude that they are not opposed to such a level that has motivated them to register their opposition, either through the filing of material in response to my directions or a ballot paper. They appear indifferent.

[24] As to the circumstances of the employees and the likely effect that termination of the Agreement would have on them, I note the Agreement covers full-time and part-time employees in the positions of Advanced Tradesman, Tradesman, Administrative Officer, Clerical Officer, Clerical Assistant, Semi Skilled and Non Skilled at 10 levels of classifications. Based on the information provided by DJM Fabrications, it would appear that the pay rates for all but one classification under the Agreement currently exceed the equivalent rate in the Award and there is a commitment by DJM Fabrications, if the Agreement is terminated, to continue paying these rates. The classification in the Agreement which has a rate of pay lower the equivalent rate in the Award is not used. There is also a commitment by DJM Fabrications, if the Agreement is terminated, to continue to adhere to the arrangements outlined in the Agreement that relate to the manner in which RDOs may be taken, the provision of safety clothing and PPE and the payment of onsite allowances via company policies.

[25] The Act contemplates the Award and NES applying as the safety net, in the event of termination of the Agreement. Further, my assessment is that the Award provides a more comprehensive range of entitlements than the Agreement.

[26] I have regard to these factors and the commitments by DJM Fabrications in relation to rates of pay and the entitlements in the company policies in considering the circumstances of the employees covered by the Agreement and the likely effect that termination will have on them.

Conclusion

[27] The Agreement does not cover any employee organisation and 12 out of 21 employees expressed support for the Application. Having regard to the terms of the Agreement in their entirety as they apply to the employees, the fact that the 12 out of 13 employees who have been motivated to engage in this process have registered their support for the termination of the Agreement, the circumstances of the employees and the likely effect on them if the Agreement is terminated, together with the views and circumstances of DJM Fabrications, I consider it is appropriate in all the circumstances to terminate the Agreement. As outlined in paragraph [18] above, I am also satisfied it is not contrary to the public interest to terminate the Agreement.

[28] Further to the above findings, the Act requires that I terminate the Agreement. 6 In accordance with s.227 of the Act, the termination will take effect from 25 November 2020.

DEPUTY PRESIDENT

 1   [2015] FWCFB 540.

 2 (2005) 139 IR 34.

 3   Ibid at 40.

 4   [2015] FWCFB 540 at [176].

 5 Ibid at [167].

 6 Section 226 of the Fair Work Act 2009 (Cth).

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