Fabquip Construction Systems P/L

[2019] FWC 3831

[2019] FWC 3831

FAIR WORK COMMISSION

DECISION

Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
Sch. 3, Item 16 - Application to terminate collective agreement-based transitional instrument

Fabquip Construction Systems P/L
(AG2019/750)

DEPUTY PRESIDENT BOYCE SYDNEY, 5 JUNE 2019

Application for termination of a collective agreement-based transitional instrument — where more beneficial monetary and non-monetary terms under the Agreement when compared to the Award —where employees unaware they are currently employed under an Agreement — where no evidence as to the individual employment agreements employees are currently subject to — where Fair Work Commission cannot be satisfied that it is appropriate to terminate the Agreement — application dismissed

[1] On 15 March 2019, Fabquip Construction Systems Pty Ltd (“Applicant” or “Company”) applied to the Fair Work Commission (the “Commission”) under Schedule 3, Item 16 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (“FW (TPCA) Act”) to terminate the Fabquip Construction Systems Pty Ltd Workshop Collective Agreement 2008 (“Agreement”).

[2] The Agreement nominally expired on 31 March 2010 and has not been replaced by a subsequent enterprise agreement. The Agreement is a “collective agreement-based transitional instrument” as defined under Schedule 2, Item 2 of the FW (TPCA) Act.

[3] Schedule 3, Item 16 of the FW (TPCA) Act provides that Subdivision D of Division 7 of Part 2-4 of the Fair Work Act 2009 (“Act”) applies in relation to the termination of a collective agreement-based transitional instrument as if it was an enterprise agreement.

[4] The termination application is opposed by the Australian Manufacturing Workers’ Union (“AMWU”), who is covered by the Agreement.

[5] I issued directions on 11 April 2019 for the filing and service of written material (evidence and submissions) by the Applicant and the AMWU. By consent, the parties requested that I determine the termination application on the papers. I agreed to this request.

[6] The Applicant relies upon the witness statement of Ms Kylie Mercer dated 17 April 2019 (“Mercer statement”), a document titled “Submission from eligible AMWU members”, which is signed by six current employees of the Applicant on 17 April 2019 (“Employee Statement”), and an undertaking by Mr Andrew Daoud, Managing Director of the Applicant, dated 17 April 2019 (“Undertaking”). The Applicant made no written submissions in support of its termination application.

[7] The AMWU relies upon the witness statement of Mr Fergal Joseph Eiffe, AMWU Organiser dated 2 May 2019 (“Eiffe statement”) and its outline of submissions dated 2 May 2019.

[8] The Applicant, through the Mercer Statement, submitted that:

•  the Company currently has six employees employed under the Agreement;

•  no AMWU members currently work for the Company;

•  relevant employees are paid above the relevant modern award (including via the receipt of a productivity allowance). That award is the Manufacturing and Associated Industries and Occupations Award 2010 (“Award”);

•  employees are on individual employment contracts and these contracts meet the requirements of the National Employment Standards (“NES”) and the Award; and

•  the AMWU’s own website states that “a large proportion of our [AMWU] members are covered under the relevant Award for their industry”.

[9] The Undertaking states that the Applicant will ensure that current eligible AMWU members employed by the company, and who are otherwise covered by the Agreement, will be paid in accordance with the Award. Further, the Company undertakes that it will follow the NES in respect of these employees.

[10] The AMWU submitted that the Agreement contains more beneficial terms than the Award at cl 12(1)(a), cll 15 to 16 and cl 22.

[11] The Eiffe statement highlighted that the relevant employees spoken to by Mr Eiffe at the workplace on 15 April 2019 were not aware that their employment was covered by the Agreement, or that the Company had applied to the Commission to terminate the Agreement.

The relevant legislative provisions

[12]  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.”

[13] In accordance with s.226, the Commission must grant the Application if:

(a) it is satisfied that it is not contrary to the public interest to do so; and

(b) it considers that it is appropriate to terminate the agreement taking into account all the circumstances, including the views of the employer (the Applicant), the views of the relevant employees, and the employee organisation covered by the agreement (the AMWU); and

(c) the circumstances of the Applicant, the employees, and the AMWU (including the likely effect that the termination will have on each of them).

[14] In discussing s.226(b), the Full Bench in Aurizon Operations Limited; Aurizon Network Pty Ltd; Australia Eastern Railroad Pty Ltd said: 1

‘All of the circumstances also need to be taken into account in considering whether termination of the agreement is appropriate … 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’. 2

Consideration

[15] While the Agreement is well past its nominal expiry date, there is no evidence before me that it is obviously ‘out of date’. Further, and as identified by the AMWU, there are clearly more beneficial monetary and non-monetary terms under the Agreement when compared to the Award.

[16] The Employee Statement relied upon by the Applicant is a pro-forma (barely one page) statement signed by all employees. There is no evidence as to what was explained to employees prior to them signing this statement. The Employee Statement is further undermined by the evidence of Mr Eiffee that employees (as at 15 April 2019) did not even know they were covered by the Agreement, let alone that the Company had applied to the Commission to have it terminated. More significantly, there is no evidence whatsoever as to the individual employment agreements employees are currently subject to, as to rates of pay, or terms and conditions of employment.

[17] The only evidence as to relevant employees’ current rates of pay is that they are said to be being paid above the Award. The Undertaking does no more than confirm that the Company will continue to do this if the Agreement is terminated, and continue to follow the NES. But such obligations are statutory requirements in any event, i.e. the undertaking promises to do nothing more that is already required by force of statute (see: sch 3, Item 23 and sch 9, Item 13 of the FW (TPCA) Act).

[18] Taking into account the foregoing, I simply cannot be satisfied that employees have made an informed decision as to whether they wish to have the Agreement terminated, and I cannot be satisfied that employees will suffer no detriment if the Agreement is terminated. There is also no evidence that the Company has made any attempt to consider, let alone commence, bargaining for a replacement agreement. Nor is there any evidence that the continued operation of the Agreement will cause any detriment to the Company, its operations or its viability more generally. In this regard, I am not satisfied that it is appropriate to terminate the Agreement.

Conclusion

[19] The application to terminate the Agreement is dismissed. An order to this effect will be issued accordingly.

DEPUTY PRESIDENT

Final written submissions:

Printed by authority of the Commonwealth Government Printer

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 1   [2015] FWCFB 540.

 2   Ibid at [167] (Watson VP, Gostencnik DP, Spencer Cmr). This decision was upheld on appeal. See: Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Aurizon Operations Ltd [2015] FCAFC 126.