Employee X
[2022] FWCA 4305
•7 DECEMBER 2022
| [2022] FWCA 4305 |
| FAIR WORK COMMISSION |
| decision |
Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
Item 16 Sch. 3—Termination of transitional instrument
Employee X
(AG2022/4199)
BROWAY PTY LTD EMPLOYEE COLLECTIVE AGREEMENT
| Health and welfare services | |
| Deputy President Young | MELBOURNE, 7 DECEMBER 2022 |
Application for termination of the Broway Pty Ltd Employee Collective Agreement
On 5 October 2022 Employee X (Applicant) applied pursuant to Schedule 3, Item 16 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Transitional Act) to terminate the Broway Pty Ltd Employee Collective Agreement (Agreement). The Agreement covers Broway Pty Lty T/A Subway Gawler (Employer) who operates Subway franchises. The Agreement came into force on 21 May 2009 and nominally expired on 21 May 2014.
The Shop, Distributive and Allied Employees’ Association (SDA) represent the Applicant.
It is uncontested that the effect of terminating the Agreement will be that the Fast Food Industry Award 2020 (FFIA) will cover and apply to employees of the Employer to whom the Agreement applies.
Directions
On 19 October 2022 I issued directions requiring the Applicant to provide any further submissions and evidence as to why the Agreement should be terminated, which was to include any evidence on which it seeks to rely in support of the application and submissions that address the requirements of section 226 of the Act. Submissions were filed in the Fair Work Commission (Commission) on and served on the Employer on 26 October 2022.
The directions required the Employer to provide any materials in response to the application regarding their views and all materials to all employees by close of business 17 November 2022. The Employer provided proof of compliance with the direction to provide all materials to all employees on 4 November 2022 and 17 November 2022. The Employer provided a response on 17 November 2022, dated 3 November 2022.
The directions required that if the Applicant, the Employer or any employee of the Employer wished to be heard with the respect of the application, they were to contact the Commission by close of business 24 November 2022. No further correspondence was received by the Commission.
In the absence of any party seeking to be heard, I have determined to deal with the Application on the papers without the need for a hearing.
For the following reasons I have determined that the Commission must terminate the Agreement.
Legislation
The Agreement is a collective agreement-based transitional instrument to which Items 15 and 16 of Schedule 3 of the Transitional Act apply. The effect of Item 16 of Schedule 3 of the Transitional Act is that the termination of agreement provisions found in Subdivision D of Division 7 of Part 2-4 of the Fair Work Act 2009 (Cth) (Act) apply to the Agreement as though a reference to an enterprise agreement included a reference to a collective agreement based transitional instrument.
Section 225 of the Act provides:
“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.”
Section 226 of the Act provides:
“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.”
Consideration
Section 225 of the Act
I am satisfied that the two threshold requirements set out in s.225 of the Act have been
met.
Firstly, the Agreement has passed its nominal expiry date of 21 May 2014. Secondly, whilst the name of the Applicant is kept confidential, based on the materials provided to me I am satisfied that the Applicant was an employee covered by the Agreement at the time the application was made and therefore has standing to make the application pursuant to section 225(a) of the Act.
Not contrary to the public interest – section 226(a)
The Full Bench in Aurizon Operations Limited; Aurizon Network Pty Ltd; Australian Eastern Railroad Pty Ltd (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 2000 (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”
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.
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 the termination of an agreement that still applies to employees 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, as set out above, the relevant modern award is the FFIA.
I accept the submissions of the Applicant that it cannot be expected that the terms and conditions of an agreement will continue unaltered in perpetuity after it has passed its nominal expiry date. Having regard to the 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 and 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.
Appropriateness of terminating the Agreement – section 226(b)
I am required to 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 them.
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).”
The Applicant contends that the Agreement should be terminated. The views of other employees are not known. The Employer submits that they do not support the termination of the current Agreement, but they acknowledge the gap between the Agreement and the FFIA and therefore nor do they oppose the application despite the financial implications for the business.
The Applicant filed a comparative analysis of the terms and conditions of employment under the Agreement with those under the Award. They submit that this analysis supports termination of the Agreement.
I note that the Award provides:
· a range of allowances that are not contained in the Agreement which may be relevant to the workplaces of the employees, for example, meal allowance and cold work allowance and accident pay;
· ordinary hours of work to be averaged over 4 weeks , whereas the Agreement allows for hours to be rostered over 52 weeks;
· under the Agreement changes to rosters may be made with 24 hours notice;
· more beneficial entitlements to rest breaks than those contained in the Agreement;
· a right to request casual conversion, whereas the Agreement does not;
· for higher rates of pay;
· for standard penalty rates for overtime to be payable after five consecutive days of work (or six days in one week and four days in the subsequent week), whereas the Agreement provides no overtime rates payable; and
· public holiday penalty loading for work undertaken on a public holiday, whereas the Agreement does not provide any loading for work undertaken on a public holiday;
· consultation about workplace change, whereas the Agreement does not;
· for a minimum annual leave loading of 17.5%, whereas the Agreement does not.
The Applicant supports termination of the Agreement. The Applicant submits that the Agreement expired at least 7 years ago. The Commission has determined that the Agreement was approved by the Workplace Authority on 21 May 2009 and the Agreement therefore reached its nominal expiry date on 21 May 4014, more than 8 years ago. The Applicant submits that the Agreement should be terminated because it contains entitlements that are less beneficial than those in the FFIA including less beneficial rates of pay, changes to rosters, overtime, allowances and no annual leave loading.
Few conditions of the Agreement are superior to those of the Award. In my view, the terms of the Award are overall more favourable to employees that those of the Agreement. This is relevant to the consideration of the ‘circumstances’ of employees covered by the Agreement and the ‘likely effect that the termination will have’ on them, for the purpose of section 266(b)(ii). I consider these matters support a conclusion that it is appropriate to terminate the Agreement.
Operative date of termination
Section 227 of the Act provides as follows:
“227 When termination comes into operation
If an agreement is terminated under section 226, the termination operates from the day specified in the decision to terminate the agreement.”
The Employer submits that they will have to implement a new payroll system and adjust the staff contracts and rostering. They submit that the Christmas period is busy for their business and seek that the Agreement’s termination is not implemented until early 2023, specifically 4 January 2023 when the first full payroll period of 2023 commences.
Section 227 of the Act affords the Commission a discretion as to the operative date of termination of an agreement. It is to be expected that new conditions of employment will apply following the termination of an agreement, and it is foreseeable that preparations will need to be made in order to implement them. In my opinion, it is reasonable to allow a period of time for the Employer to prepare and make adjustments to their businesses to apply the Award. The period needs to be sufficient to allow the Employer to make changes to payroll systems and administrative arrangements and for consideration of the potential cost implications associated with the application of the Award. As such, I consider a period of four weeks from the date of this decision before the termination of the Agreement commences to operate to be appropriate.
Conclusion
Having considered the material contained in the Form F24C declaration filed with the application, the submissions filed by the Applicant on 26 October 2022 and the submissions filed by the Employer on 17 November 2022, I am satisfied that termination of the Agreement is not contrary to the public interest. Taking into account all of the circumstances including those in section 226(b)(i) and (ii) of the Act, I consider that it is appropriate to terminate the Agreement.
Accordingly, I must terminate the Agreement. The termination will operate from the 4 January 2023.
DEPUTY PRESIDENT
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<AC322086 PR748687>
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