Dredging International (Australia) Pty Ltd

[2019] FWCA 778

[2019] FWCA 778

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.225—Enterprise agreement

Dredging International (Australia) Pty Ltd
(AG2018/6437)

DREDGING INTERNATIONAL CONTRACT (NON-PROPELLED DREDGES), AIMPE ENTERPRISE AGREEMENT 2012

Dredging industry
DEPUTY PRESIDENT BINET	PERTH, 7 FEBRUARY 2019

Application for termination of the Dredging International Contract (Non-Propelled Dredges), AIMPE Enterprise Agreement 2012.

[1] Dredging International (Australia) Pty Ltd (Dredging International)has made an application (Application) to the Fair Work Commission (FWC) to terminate the Dredging International Contract (Non-propelled dredged) AIMPE Enterprise Agreement 2012 (Agreement) pursuant to section 225 of the Fair Work Act 2009 (Cth) (FW Act).

[2] The Agreement is a single enterprise agreement made pursuant to section 185 of the FW Act with a nominal expiry date of 31 March 2017.

[3] The parties to the Agreement are Dredging International and its employees eligible to be a member of the Australian Institute of Marine and Power Engineers (AIMPE) employed by Dredging International to work in or in association with dredging as a casual employee (Employees).

[4] AIMPE is covered by the Agreement.

[5] Section 225 of the FW Act states:

“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.”

[6] Section 226 of the FW Act states:

“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.”

[7] In support of the Application, Dredging International filed a Statutory Declaration (Bruce Declaration) by Mr Gordon Bruce (Bruce), which states that Dredging International has not employed any employees covered by the Agreement since October 2013. According to Mr Bruce Dredging International does not intend to engage any new employees which would be covered by the Agreement.

[8] On 23 November 2018, directions were issued with respect to the Application. AIMPE were directed to file an outline of submissions in response to the Application and any evidence on which AMPIE intended to rely by 6 December 2018.

[9] In its response to the directions, AIMPE filed written submissions stating that AIMPE oppose the Application to terminate the Agreement. Both AIMPE and Dredging International were offered the opportunity to make oral submissions in support of their written submissions. Both elected not to do so and this Application has been determined on the papers.

[10] At the request of AIMPE a conference was convened on 29 January 2019 and both Dredging International and AIMPE made further submissions in relation to the Application. Subsequent to that conference Dredging International filed further materials to address issues raised by AIMPE at the conference.

AIMPE Submissions

[11] AIMPE submits that although there might currently be no employees covered by the Agreement there is the potential for Dredging International to be awarded the tender for future major projects, in particular the approval by the South Australian Government to undertaken the Outer Harbour Channel Widening Project.

[12] AIMPE say that that the pool of marine officers who have dredging experience is reasonably limited. If the Agreement is terminated the AIMPE say that those officers who were employed on the last project to which the Agreement applied would face the prospect of working for less favourable conditions on upcoming projects.

[13] AIMPE submit that it is in the public interest to refuse the Application as the continued operation of the Agreement facilitates the efficient start-up of new dredging projects such as the Outer Harbour project and ensures consistency in terms and conditions between dredging projects.

Dredging International Submissions

[14] Dredging International says that is has not secured any future works to which this Agreement is applicable. They submit that the fact that no employees are currently covered by the Agreement is a factor which the FWC should and has previously attached significant weight. 1

[15] According to Dredging International its major competitors have in place industrial instruments which are significantly more competitive than the Agreement and that the Agreement is restraining its capacity to conduct business productively. Materials filed by Dredging International identify a number of aspects of the Agreement which result in significant commercial disadvantage to it as compared to the industrial instruments applying to its major competitors including rates of pay of up to 39% higher, bonus commitments, enhanced superannuation contributions and manning restrictions.

[16] Dredging International assert that termination of the Agreement will improve its capacity to win future work and create employment opportunities and it is therefore in the public interest to terminate the Agreement.

[17] Dredging International further submit that the termination of the Agreement will not have any relevant detrimental impact on the achievement of the objects of the FW Act, employment levels, inflation or the maintenance of proper industrial standards but will positively impact on productivity and economic growth.

Consideration

[18] As the Agreement has passed its nominal expiry date and that Dredging International is an employer covered by the Agreement, I find Dredging International has standing to make the Application pursuant to section 225(a) of the FW Act and that the appropriate statutory declaration accompanied the Application.

[19] Section 226(a) requires the FWC to be satisfied that it is not contrary to the public interest to terminate the Agreement. This requires the FWC to consider how the termination of the agreement might foreseeably affect the public as a whole, such as the impact on the achievement or otherwise of the various objects of the Act, employment levels, inflation and the maintenance of proper industrial standards.²

[20] The public interest is distinct in nature from the interests of those covered by the Agreement. The views of those covered by an agreement may be relevant to the exercise of the discretion if they shed light on the effect of the termination on public interest, but those views should not be given any independent weight.³

[21] The object of the FW Act is set out in section 3 of the FW Act as follows:

“3. Object of this Act

The object of this Act is to provide a balanced framework for cooperative and productive workplace relations that promotes national economic prosperity and social inclusion for all Australians by:

…

(b) ensuring a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions through the National Employment Standards, modern awards and national minimum wage orders;

…

(f) achieving productivity and fairness through an emphasis on enterprise-level collective bargaining underpinned by simple good faith bargaining obligations and clear rules governing industrial action;

…”

[22] The specific objects in section 171 of the FW Act inform how the general object in section 3 of the FW Act is to be satisfied in the context of matters dealt with in Part 2-4 of the FW Act:

“171. Objects of this Part

The objects of this Part are:

(a) to provide a simple, flexible and fair framework that enables collective bargaining in good faith, particularly at the enterprise level, for enterprise agreements that deliver productivity benefits; and

(b) to enable the FWC to facilitate good faith bargaining and the making of enterprise agreements, including through:

(i) making bargaining orders; and

(ii) dealing with disputes where the bargaining representatives request assistance; and

(iii) ensuring that applications to the FWC for approval of enterprise agreements are dealt with without delay.”

[23] The objects in sections 3(f) and 171(a) of the FW Act are the facilitation of good faith bargaining and the making of enterprise agreements that deliver productivity benefits. Agreements which continue beyond their nominal expiry date often fail to remain relevant from a labour or business perspective. The termination of an agreement can provide significant impetus for parties to negotiate replacement enterprise agreements that are consistent with market conditions and do not fall below minimum community standards as set out in the relevant modern award.

[24] There are significant commercial incentives for Dredging International to secure a replacement agreement in a timely manner in the event that it secures new dredging work therefore I am not convinced of the merit of the AIMPE submission that the termination of the Agreement will lead to delays in the commencement of new projects. If the parties commence bargaining for a new agreement it would occur in the context of prevailing market conditions.

[25] In determining whether it is appropriate to terminate an enterprise agreement, section 225 of the FW Act requires consideration be given to the views and circumstances of the employer, employees and any employee organisation covered by the agreement.

[26] In Noranda Pacific Pty Ltd [2016] FWCA 8978 at [33] the FWC noted that a union’s opposition to the termination of an enterprise agreement based on the interest of potential future employees “… must be balanced against the fact that there are no current employees who will suffer any detriment if the Agreement is terminated.

[27] I have taken into account AIMPE’s views with respect to the termination of the Agreement. Balancing those views against the views of the employer and in the absence of any employees suffering any detriment if the Agreement is terminated I am satisfied that it is appropriate to terminate the Agreement.

Conclusion

[28] In having regard to the requirements of section 226 of the FW Act, the evidence before me and the submissions made on behalf of the parties, I am satisfied that it not contrary to the public interest to terminate the Agreement and it is appropriate to do so.

[29] The termination will come into effect from the date of this decision.

DEPUTY PRESIDENT

 1   Boom Logistics Ltd [2015] FWCA 1183 at [4]

2 Re Kellogg Brown and Root, Bass Strait (Esso) Onshore/Offshore Facilities Certified Agreement 2000 (2005) 139 IR 34 at [40]–[41].

3 Ibid.

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