Drewmaster Pty Ltd T/A Palmer Colonial Golf Course/Palmer Gold Coast Golf Course/Palmer Sea Reef Golf Course

[2021] FWCA 6923

[2021] FWCA 6923

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.225—Enterprise agreement

Drewmaster Pty Ltd T/A Palmer Colonial Golf Course/Palmer Gold Coast Golf Course/Palmer Sea Reef Golf Course
(AG2021/7481)

PLAYMORE GOLF AUSTRALIA COLLECTIVE AGREEMENT 2008

Industries not otherwise assigned
COMMISSIONER HUNT	BRISBANE, 16 DECEMBER 2021

Application for termination of the Playmore Golf Australia Collective Agreement 2008.

[1] On 17 September 2021, Drewmaster Pty Ltd T/A Palmer Colonial Golf Course/Palmer Gold Coast Golf Course/Palmer Sea Reef Golf Course (the Employer) made an application pursuant to s.225 of the Fair Work Act 2009 (the Act) to terminate the Playmore Golf Australia Collective Agreement 2008 (the Agreement). The Agreement passed its nominal expiry date in 2013.

[2] The Agreement was made in 2008, prior to the Act coming into force and is a “collective agreement-based transitional instrument” (CABTI). The application is made pursuant to s.225(b) of the Act and under Schedule 3, Item 16 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (the Transitional Act). The application of these sections is discussed below. Accordingly, the application should have been made using Form F28. It is noted, in any event, that for applications brought under schedule 3, item 16, the application is dealt with pursuant to s.225 of the Act, with the same considerations required as if it were an agreement made under the Act.

[3] I have exercised the discretion within s.586 of the Act to treat the application made using the Form F24B as though it were made using the Form F28.

[4] In the F24B, the Employer states:

“Original Agreement was with Playmore Golf Pty Ltd in 2008

The business of Playmore Golf Pty Ltd was sold to Queensland Nickel Pty Ltd in 2011. The business was subsequently sold to Palmer Leisure Australia Pty Ltd and then further transferred to Drewmaster Pty Ltd on 1 December 2020. Drewmaster Pty Ltd is the current operator of the business and employer.”

[5] While the Employer did not provide company search documents from the Australian Securities and Investments Commission, I am prepared to accept on the material before the Commission that the Employer is the ‘new employer’ within the meaning of s.311 the Act. This is certainly not in dispute.

[6] The Agreement covers the Employer and its employees for whom rates of pay and conditions of employment are contained in the Agreement. The application was made on behalf of the Employer by Mr Ben Wood, General Manager of the Employer. The application was supported by a Form F24C declaration of Mr Wood which declared the following:

“Terminating the agreement is not contrary to the public interest for the following reasons:

- This process is being actioned by the employer to allow modern award conditions to be followed. Current agreement nominal expiry is 2013.

- This process does not negatively impact any employee covered by this agreement- majority of employees are in fact significantly advantaged by this process, no employee is disadvantaged.

- Within this process all employees (100%) are transitioned to a salary or modern award that is the same or at a higher rate of pay as the current agreement,

- The overall impact does not have any negative impact on the public and the action does not cause significant economic loss to parties, or has the potential to damage the Australian economy or negatively affect the delivery of essential services.

- There is no history of unlawful industrial action or contraventions by the relevant parties at the particular workplaces.

- There is no risk or suggestion of future unlawful industrial action by any of the parties involved.

MA00080 Amusement, Events & Recreation Award 2020 has been selected to transition to.

[…]

Terminating this agreement will allow the business to move to a current modern award.

The nominal expiry of this agreement was in 2013 and as such is 8 years past the nominal period.

Moving to the modern award system will allow a modern approach and allow modern interpretations of employment terms & conditions governed by Fair work Commission.

MA00080 Amusement, Events & Recreation Award 2020 has been selected and used for comparative purposes.

The views of the employees were considered and demonstrated by Table <1.0> of this submission. As demonstrated by the table no employee is disadvantaged by this process. As demonstrated by this table 18 of the 55 employees are on the same hourly rate and the remaining 37 employee are on a higher hourly rate or a rate that is equal but now attracting award penalty rates.

A payroll comparison by employee was conducted across multiple weeks factoring employment terms, days of work & total worked hours. The results of this analysis are set out in table 1.0

Views of the employer were considered- terminating this agreement will allow modern employment conditions for the employer and allow for modern interpretations in the workplace.”

[7] A table of wages and salary for employees covered by the Agreement was provided. Where an employee is in receipt of payments greater than the Award, the Employer provided the following notation: “Pay current rate above award and allow award to catch up.”

[8] On 5 October 2021, I directed the Employer to communicate in writing to each of the employees covered by the Agreement, inviting them to correspond by email with my chambers in the event they wished to provide their views by 18 October 2021. Further, I informed the Employer of the following:

“The Commission has been provided with all pay rates of existing employees covered by the Agreement, together with rates they would be paid if the Agreement is to be terminated.  This schedule will not be provided to employees as it contains private information on each person’s pay rate.

The Commissioner does note, however, that on the schedule provided to the Commission there appear to be four employees (only) who are being paid less than they would as against the award.  The Commissioner has not undertaken any analysis as to the existing Agreement to see if s.206 of the Act applies, requiring an Award base rate of pay to be the minimum paid to employees covered by an Agreement.  The Employer is encouraged to review this issue for the four employees.”  

[9] I also made the following Direction to the Employer:

“The Employer is directed to make clear in correspondence to the Commission and to employees if, where it advises that it will “Pay current rate above award and allow award to catch up”, the Employer will continue to make an over-award payment to employees on termination of the Agreement, until such time as the Award is increased to the rate being paid to the employee. For example, if an employee is currently receiving $28 per hour and the Award rate is $26 per hour, the employee will continue to receive $28 per hour if the Agreement is terminated. If so, such conditions would be noted in any decision to terminate the Agreement, as is the Commissioner’s practice.”

[10] On 10 October 2021, I received confirmation from the Employer that it had complied with the above direction. The employees covered by the Agreement were invited to provide any views relevant to the application. Mr Wood stated that there were 54 employees covered by the agreement.

[11] Between 11 and 17 October 2021, I received a number of emails from five employees covered by the Agreement. In addition, an employee filed an open letter, signed by 11 employees, including the five employees who had separately emailed my chambers. The 11 employees opposed termination of the Agreement because they stated that they would be entitled to superior annual wage increases under the Agreement. I deal with this matter later in this decision in my consideration of s.226(1)(b)(i) of the Act, where I have determined that the Agreement does not actually cause covered employees to be entitled to superior annual wage rate increases, when compared to the Award. Accordingly, the employees’ objections, while quite understandable having regard to the conduct of the Employer, were misplaced.

[12] One of the employees mistakenly suggested that national wage increases had been, in recent years, only 0.80% per annum. Correspondence was sent from my Chambers informing employees that the increases had been as follows:

                1 July 2017          3.3%

                1 July 2018          3.5%

                1 July 2019          3.0%

                1 July 2020          1.75%    (with staggered increases across various industries)

                1 July 2021          2.5%

[13] On 4 November 2021, I convened a telephone conference with the Employer and some of the employees covered by the agreement. All employees had been invited to participate in the conference. I discussed the employees’ objections to the termination of the Agreement, together with the view I held that the Agreement does not entitle them to an annual wage increase beyond the nominal expiry of the Agreement. I afforded the employees until 17 November 2021 to provide any further views they had. No further views were received from any employees.

Termination of an enterprise agreement after its nominal expiry date

[14] As earlier noted, item 16 of Schedule 3 to the Transitional Act provides that Subdivision D of Division 7 of Part 2-4 of the Act applies in relation to a collective agreement-based transitional instrument as if a reference to an enterprise agreement included a reference to a collective agreement-based transitional instrument.

[15] Subdivision D of Division 7 of Part 2-4 of the Act provides for the termination of an enterprise agreement after its nominal expiry date. This subdivision consists of ss.225, 226 and 227, the terms of which are 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.”

Not contrary to the public interest (s.226(a))

[16] I will first consider whether I am satisfied that termination of the Agreement is “not contrary to the public interest”.

[17] In his decision to approve the termination of the McDonald’s Australia Enterprise Agreement 2013, Deputy President Colman observed that: 1

“Section 226(a) does not require the Commission to be satisfied that the termination of an enterprise agreement is in the public interest. It sets a lower requirement. The Commission must be satisfied that it is not contrary to the public interest to terminate the agreement.” (emphasis is in the original)

[18] The Agreement was made 13 years ago and has less beneficial terms and conditions to employees than those contained within the Award. I am satisfied it is not contrary to the public interest to terminate the Agreement.

Appropriate (s.226(b))

[19] I must consider whether it is “appropriate” to terminate the Agreement, taking into account all the circumstances, including the views of the employees, each employer and each employee organisation covered by the Agreement, and the circumstances of those employees, employers and organisations, including the likely effect that the termination will have on each of them.

[20] While I note the Employer supports termination of the Agreement (by virtue of this application), the jurisdiction requires the Commission to be satisfied it is appropriate to terminate the Agreement taking into consideration the views of the Employer and the employees covered by the Agreement, together with the circumstances and the likely effect the termination will have on each of them.

[21] There are no employee organisations covered by the Agreement.

[22] The views of the employees who provided views were that termination of the Agreement would result in them ‘losing’ an entitlement to a 3% wage rate increase in October each year. The employees did not otherwise raise any objection to termination of the Agreement. On the evidence before the Commission, it is apparent that the Employer has given employees covered by the Agreement a 3% wage rate increase in October of each year, including beyond the nominal expiry date of the Agreement.

[23] The relevant clause of the Agreement upon which the employees’ views were based is at clause 4.1.3 of the Agreement which provides:

“4.1.3 Will the above hourly rates of pay increase over the nominal period of the Agreement?

The above wage rates will be increased at the rate of 3% per annum calculated from the 1^st October each year.”

[24] Clause 4.1.4 of the Agreement is also of relevance to the consideration of this matter, which provides:

“4.1.4 What if the Agreement wage increases are less than the Award wage increases?

In keeping with the Company’s commitment that no Employee will be disadvantaged by implementation of this Agreement, the Company, at the date of the above Agreement wage increases, will review all Agreement wage increases for the previous calendar year (including performance based increases) against Award wage increases for that calendar year. If there is a shortfall then the Company will make up the difference by the second full pay period after the Above Agreement wage increase takes effect.”

[25] The effect of clause 4.1.4 of the Agreement is essentially the same as ss.206(1)-(2) of the Act, which relevantly provide:

“206 Base rate of pay under an enterprise agreement must not be less than the modern award rate or the national minimum wage order rate etc.

If an employee is covered by a modern award that is in operation

(1) If:

(a) an enterprise agreement applies to an employee; and

(b) a modern award that is in operation covers the employee;

the base rate of pay payable to the employee under the agreement (the agreement rate) must not be less than the base rate of pay that would be payable to the employee under the modern award (the award rate) if the modern award applied to the employee.

(2) If the agreement rate is less than the award rate, the agreement has effect in relation to the employee as if the agreement rate were equal to the award rate.

…”

[26] In the decision of the Full Bench of this Commission in AMWU v Berri Pty Ltd[2017] FWCFB 3005, the Full Bench relevantly said:

“[114] The principles relevant to the task of construing a single enterprise agreement may be summarised as follows:

1. The construction of an enterprise agreement, like that of a statute or contract, begins with a consideration of the ordinary meaning of the relevant words. The resolution of a disputed construction of an agreement will turn on the language of the agreement having regard to its context and purpose. Context might appear from:

(i) the text of the agreement viewed as a whole;

(ii) the disputed provision’s place and arrangement in the agreement;

…”

[27] While the text of clause 4.1.3 says “[t]he above wage rates will be increased at the rate of 3% per annum calculated from the 1st October each year”, the context of the words of clause 4.1.3 includes the heading beneath which those words appear. The heading reads as follows:

“4.1.3 Will the above hourly rates of pay increase over the nominal period of the Agreement?” (emphasis added)

[28] The heading to the clause provides important context as to how the words immediately below it should be construed. The heading to the clause clearly contemplates that the words which follow it have application “over the nominal period of the Agreement”, and that the following words do not have application beyond the nominal period of the Agreement. The heading could have said, for example “until the Agreement is terminated or replaced”. Such choices of wording are deliberate and cannot be ignored.

[29] I consider that the correct construction of clause 4.1.3 of the Agreement requires the context to be taken into account. Therefore, the heading must be taken into account.

[30] It follows that, since the effluxion of the nominal period of the Agreement, which occurred sometime in 2013, the Agreement has not entitled employees to a 3% wage increase on 1 October of every year. However, and notwithstanding the guarantee afforded by ss.206(1)-(2) of the Act, the effect of clause 4.1.4 of the Agreement has been that the most the Employer has been required to increase wage rates since the effluxion of the nominal period has been to pay rates no lower than the relevant modern award.

[31] It is understandable that the employees who objected to termination of the Agreement did so on the understanding that the Agreement entitled them to annual 3% wage increases. On the information before the Commission, it appears by way of the Employer’s conduct that it held the same view. While this matter has been a live conversation since the application has been made, the Employer made a further 3% wage increase to employees covered by the Agreement in October 2021 without, in my view, any obligation to do so.

[32] As I noted earlier at [7], the Employer has undertaken not to lower wage rates following termination and will “Pay current rate above award and allow award to catch up”. That is, the Employer will continue to make an over-award payment to employees on termination of the Agreement, until such time as the Award is increased to the rate being paid to the employee. Accordingly, there is no disadvantage to employees covered by the Agreement.

[33] I discussed the preceding matters as to the interpretation of clause 4.1.3 with the employees who attended the conference on 4 November 2021 and indicated to them my preliminary view that clause 4.1.3 did not presently entitle them to an annual 3% wage increase. I indicated to the employees it was a necessary matter for consideration having regard to s.226(b)(ii) of the Act.

[34] The likely effect on the Employer is that it will need to comply with the Award and provide annual wages increases pursuant to the Award to employees who are paid at Award rates only. For employees paid greater than the Award, the Employer is entitled to absorb any over-award payments into increases payable. It may, at its discretion, pass on the national wage increase to employees.

[35] The likely effect on employees will be that they will become entitled to penalty rates for work outside of ordinary hours of work. On the evidence before the Commission, far fewer penalty rates have been payable to employees under the Agreement.

[36] Taking into account the views of the persons (including the Employer) referred to in s.226(b) that have been presented to the Commission, and the circumstances of those persons, as well as the effect that termination will have on each of them, I consider that it is appropriate to terminate the Agreement.

The operative date of the termination

[37] Section 227 provides that, if an enterprise agreement is terminated under s.226, the termination ‘operates from the day specified in the decision to terminate the agreement.’

[38] This is the Employer’s application. The Employer has not nominated a specific date for the termination to take effect.

[39] I consider it suitable for termination of the Agreement to take effect on the same date as this decision.

Conclusion

[40] For the reasons given above, in consideration of s.226(a), I am satisfied that the termination of the Agreement is not contrary to the public interest. There is nothing before me which raises public interest considerations which might militate against the termination of the Agreement.

[41] For the reasons given above, in consideration of the material before me relevant to ss.226(b)(i) and (ii), I consider that it is appropriate to terminate the Agreement.

[42] In accordance with s.226, I must terminate the Agreement. The application to terminate the Agreement is approved.

[43] For the reasons given above, the termination will take effect from 16 December 2021.

COMMISSIONER

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 1   [2019] FWCA 8563 at [16].