Employee X

[2002] FWCA 1055

[2002] FWCA 1055

FAIR WORK COMMISSION

DECISION

Fair Work (Transitional Provisions and Consequential Amendments) Act 2009

Item 16 Sch. 3—Termination of transitional instrument

Employee X

(AG2021/9239)

HGC ADMINISTRATIVE SERVICES PTY LTD EMPLOYEE COLLECTIVE AGREEMENT 2006

Retail industry
DEPUTY PRESIDENT CLANCY	MELBOURNE, 25 MARCH 2022

Application for termination of the HGC Administrative Services Pty Ltd Employee Collective Agreement 2006.

1. On 22 December 2021, an application was filed by the Shop, Distributive and Allied Employees’ Association (SDA), on behalf of Employee X, seeking to terminate the HGC Administrative Services Pty Ltd Employee Collective Agreement 2006 (the Agreement), pursuant to Schedule 3, Item 16 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Transitional Act).

1. The Agreement is a collective agreement-based transitional instrument and has passed its nominal expiry date of 31 August 2010.[1] It is expressed to cover HGC Administrative Services Pty Ltd (the Employer) and its employees in Victoria and New South Wales engaged in the job classifications of Store Retail Manager, Full-Time/Part-Time Retail Worker and Casual Retail Worker.[2]

1. I issued Directions on 24 December 2021 and amended Directions on 4 February 2022. The SDA was required to serve both the Form F28 application and the Form F24C statutory declaration made by Gerard Dwyer on the Employer by 7 January 2022. The directions also required, in accordance with a stipulated timeline, the following:

• the SDA to file with the Commission the name and details of Employee X so as to satisfy the Commission that they were an employee covered by the Agreement;

• the Employer to provide a copy of the Form F28 application and the Form F24C statutory declaration made by Mr Dwyer to each of their employees via email and place a copy on a noticeboard at each workplace that is used for communications with staff;

• the Employer to lodge with the Commission and serve on the SDA and their employees via email any material and witness statements upon which it relied, including material which addresses whether it is or is not contrary to the public interest for the Commission to terminate the Agreement, material which expresses the views of the Employer regarding the application to terminate the Agreement and material which describes the circumstances of the Employer, including the likely effect that the termination of the Agreement would have on it. Further, I required any submissions from the Employer on the impact of the Agreement no longer applying to it and the General Retail Industry Award 2020 instead setting the terms and conditions of employment;

• any employee who wished to do so to send to the Commission and serve on the Employer any material addressing the same issues; and

• the SDA to lodge with the Commission, and serve on the Employer, any reply material.

1. On 11 January 2022, my Chambers received a statutory declaration made by Employee X on 16 December 2021, and which outlined their desire to remain anonymous. The statutory declaration was accompanied by several payslips of Employee X confirming their employment with the Employer.

1. On 21 February 2022, my Chambers received an email from Mr Alexei Glavenko, Director of the Employer, suggesting that the Employer will not oppose the application subject to Employee X confirming their identity as a current employee covered by the Agreement. On the same day, SDA sent correspondence in reply noting that Employee X had provided the Commission with a statutory declaration identifying themselves together with proof of employment.

1. In the circumstances, I considered it useful to list the matter for a Mention by telephone on 24 February 2022. At the Mention, I directed the Employer to provide my Chambers with a list of employees as at both 22 December 2021, when the application was made, and 24 February 2022. This direction was complied with on 25 February 2022.

1. An email was then sent from my Chambers on 2 March 2022 advising that upon reviewing the statutory declaration of Employee X dated 16 December 2021 and both lists of employees, I have been satisfied that Employee X was an employee at the time the application was made and further, that they remain an employee. The Employer was also asked to confirm that it did not oppose the application to terminate the Agreement. This had been previously suggested in Mr Glavenko’s email dated 21 February 2022.

1. While the Employer subsequently confirmed that it did not oppose the application, it asserted that some employees support the retention of the Agreement on the basis that it offers them greater flexibility. Therefore, an email was sent to the Employer in response, attaching my amended Directions of 4 February 2022 and confirming that any interested employees had the opportunity to put their views before the Commission by 4pm on 7 March 2022. None did so.

Legislation

1. As outlined above, the Agreement is a collective agreement-based transitional instrument to which Item 16 of Schedule 3 of the Transitional Act applies. 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 Act apply as though a reference to an enterprise agreement includes a reference to a collective agreement-based transitional instrument.

1. The Act therefore 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.”

Consideration

Section 225 of the Act

1. I am satisfied that the two threshold requirements set out in s.225 of the Act have been met.

1. Firstly, as noted above at [2], the Agreement has passed its nominal expiry date of 31 August 2010.

1. Secondly, as noted above at [7], having regard to the statutory declaration by Employee X dated 16 December 2021, the copies of payslips provided to my Chambers and the list of employees as at 22 December 2021 provided by the Employer, I am satisfied that Employee X was an employee of the Employer and was covered by the Agreement at the time the application was filed. As such, I am satisfied that Employee X has standing to bring the application pursuant to s.225(b) of the Act.

Section 226(a) of the Act – Public Interest

1. As regards 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[3] (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[4] (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…”[5]

1. 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.[6]

1. 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 the relevant modern award created during the Award Modernisation process and the National Employment Standards (NES). In this case, the relevant modern award for the relevant employees is the General Retail Industry Award 2020 (the Award).

1. Having regard to 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 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.

Section 226(b) of the Act – Appropriateness

1. 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).”[7] (My emphasis, reference omitted)

1. I intend to adopt this approach.

Section 226(b)(i)

1. In terms of s.226(b)(i), I note that there is no employee organisation covered by the Agreement but, as the passage from Aurizon outlined above indicates, it is open for me to consider the views of the SDA. I have simply noted the SDA supports the termination of Agreement.

1. As noted above at [8], the Employer does not object to the termination of the Agreement.

1. As an employee covered by the Agreement, Employee X filed the application to terminate the Agreement. Clearly, they support the Agreement being terminated.

1. As for other employees covered by the Agreement, I am satisfied that they have been on notice as to the application through the directions and amended directions I issued on 24 December 2021 and 4 February 2022 respectively, and the various requirements outlined therein. I am also satisfied that the employees had a reasonable period of time to file material should they have wished to do so. In the Directions, I outlined that the impact of the Agreement being terminated would be the Award setting the terms and conditions of employment and a hyperlink to the Award was provided. Whilst the Employer asserted that some employees supported the retention of the Agreement on the basis that it offers greater flexibility, no submissions from any other employees have been filed in the Commission and I will therefore accord neutrality to their views in considering the application.

Section 226(b)(ii)

1. As there are no organisations covered by the Agreement, there are no circumstances for me to take into account in this respect.

1. There is no direct evidence from employees covered by the Agreement. Mr Dwyer of the SDA completed the requisite F24C Statutory Declaration on behalf of Employee X. In this, Mr Dwyer contends that the terms and conditions provided in the Agreement have fallen below the minimum terms and conditions of the Award and as such, the employees currently covered by the Agreement suffer a disadvantage. Mr Dwyer outlined the following:

“Increases in the rates of pay have not kept up with the rate of increases in the [Award] so that over time the buy-out of penalty rates has been absorbed and the base rate of pay no longer compensates for a lack of allowances, annual leave loading, and penalty rates leaving employees working Evenings, Saturdays, Sundays and Public Holidays worse off than under the [Award].”

1. Mr Dwyer submits that terminating the Agreement will advantage the employees covered by it as the effect of a termination would be that Employee X, and other employees currently covered by the Agreement will be entitled to the more favourable terms and conditions prescribed by the Award.

1. Assessing the likely effect of termination of the Agreement on the Employer and the employees more broadly requires evaluating the impact of the Award applying instead of the Agreement.

1. The application and the SDA submissions included a comparative analysis of the rights, entitlements and benefits of the Agreement vis-à-vis the Award.[8] The SDA submitted this analysis supports termination of the Agreement. The Employer does not contend that the comparisons outlined by the SDA were not accurate.

1. I have noted that, amongst other things, the Award:

·   provides for a range of allowances that are not contained in the Agreement and some of these may be relevant to the workplace of the employees (e.g. meal allowance, first aid allowance, travel allowances, motor vehicle allowance and laundry allowance);

·   provides for standard penalty rates whereas the Agreement does not;

·   provides for overtime rates whereas the Agreement does not;

·   provides for a higher public holiday penalty rate of pay for both permanent employees and casual employees;

·   provides for shift loadings whereas the Agreement does not;

·   includes a right to request casual conversion whereas the Agreement does not;

·   provides for annual leave loading whereas the Agreement does not;

·   provides for community service leave whereas the Agreement does not;

·   provides for paid rest breaks whereas the Agreement does not;

·   provides for two consecutive days off per week or three consecutive days off per two-week cycle whereas the Agreement provides for two consecutive days off per four-week cycle;

·   provides for individual flexibility arrangements whereas the Agreement does not;

·   provides for one paid rest break and one unpaid meal break of at least 30 minutes during a shift of more than 5 hours but less than 7 hours whereas the Agreement provides for either one paid meal break (where it is impractical for the employee to be relieved) or one unpaid meal break (where the employee is relieved) of between 30 and 60 minutes during a shift of more than 6 hours;

·   provides leave to deal with Family and Domestic Violence whereas the Agreement does not; and

·   provides that guaranteed working hours and meal break durations for part time employees are to be agreed in writing whereas the Agreement does not.

1. As to the likely effect of the termination of the Agreement on Employee X and the other employees, the information provided is such that I consider it is open to me to infer they would not be worse off should the Agreement be terminated, leaving the Award to apply.

Conclusion

1. Having regard to the material before me and noting the Act contemplates the Award and NES applying as the safety net in the event of termination of the Agreement, I am satisfied that it is not contrary to the public interest to terminate the Agreement. I have noted the views and circumstances of Employee X and the Employer covered by the Agreement and I have considered the Agreement and have compared it with the Award. I am satisfied it is appropriate in all the circumstances to terminate the Agreement.

1. Further to these findings, the Act requires that I terminate the Agreement.[9]

Operative Date of Termination

1. Section 227 of the Act affords the Commission a discretion as to the operative date of a termination of an agreement.

1. The Full Bench of the Commission in Gangell v Lobethal Abattoirs Pty Ltd stated:

   “We would also observe that the need to deal with an application expeditiously is particularly important in cases where, as here, there are assertions that employees to whom the agreement applies are at times earning less than under the relevant modern award.”[10]

2. The application has been dealt with in a relatively expeditious manner, noting that the Agreement reached its nominal expiry date on 31 August 2010 and the application was not made until 11 years and 4 months after this. All relevant parties with an interest in the application then had to be notified and required an opportunity to put material before the Commission. There has been the Christmas/New Year period to contend with and the ongoing challenges associated with the COVID-19 pandemic.

1. I accept there should be no undue delay in terminating an agreement where it is appropriate to do so. I also note the Employer did not make a submission for the Commission to exercise its discretion to delay the operative date of termination. In this matter, I consider that in order to facilitate a smooth transition from the arrangements under the Agreement to the arrangements under the Award, a short period of time should be allowed before the termination of the Agreement comes into operation.

1. As such, the termination will take effect from 10 April 2022. An order to this effect will be issued today.

DEPUTY PRESIDENT

[1] AC301497 at sub-clause 2.1.

[2] Ibid at sub-clause 1.2.

[3] [2015] FWCFB 540. 

[4] (2005) 139 IR 34.

[5] Ibid at 40.

[6] [2015] FWCFB 540 at [176].

[7] Ibid at [167].

[8] Attachment A to the Submissions of the SDA dated 7 March 2022.

[9] Fair Work Act 2009 (Cth), s.226.

[10] [2018] FWCFB 4344 at [23].

Printed by authority of the Commonwealth Government Printer

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