Fero Strata Systems Pty Ltd

[2020] FWCA 4338

[2020] FWCA 4338

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.225—Enterprise agreement

Fero Strata Systems Pty Ltd
(AG2020/1773)

FERO STRATA SYSTEMS PTY LTD EMPLOYEE ENTERPRISE AGREEMENT 2013

Manufacturing and associated industries
DEPUTY PRESIDENT BINET	PERTH, 2 SEPTEMBER 2020

Application for termination of the Fero Strata Systems Pty Ltd Employee Enterprise Agreement 2013.

[1] Fero Strata Systems Pty Ltd (Fero)has made an application (Application) to the Fair Work Commission (FWC) to terminate the Fero Strata Systems Pty Ltd Employee Enterprise Agreement 2013 (Agreement) pursuant to section 225 of the Fair Work Act 2009 (Cth) (FW Act).

[2] The Agreement was approved by Senior Deputy President Watson pursuant to section 185 of theFW Act, on 30 October 2013 and commenced operation on 6 November 2013. The Agreement has a nominal expiry date of 16 October 2017.

[3] The parties to the Agreement are Fero and all the employees employed by Fero employed in any of the classifications listed in Schedule Two to this Agreement, but does not apply to employees engaged in a managerial capacity as specified in their letter of offer (Employees).

[4] In support of the Application, Fero filed a Statutory Declaration by Ms Britt Cook, the Head of Human Resources for DYWIDAG-Systems International Pty Ltd T/A DSI Underground and its subsidiary entities including Fero (Cook Declaration).

[5] On 15 July 2020, directions were issued with respect to the Application (Original Directions). Fero was directed to file an outline of submissions in support of the Application and any evidence on which they relied by 4pm Thursday 23 July 2020.

[6] On 20 July 2020, directions were issued with respect to the Application which interalia required Fero to provide a copy of the Application, the Cook Declaration, the Directions, and all materials filed in accordance with the Directions to the Employees.

[7] On 31 July 2020, Fero filed with the FWC a statutory declaration confirming the Directions had been complied with.

[8] The Directions invited Fero and any Employee wishing to be heard with respect to the Application to contact my Chambers by 4 pm Thursday 6 August 2020. If no such contact was made, it was advised that a conclusion about the Application would be made on the written materials filed in accordance with the Directions.

[9] No contact has been made to Chambers by any Employee wishing to be heard with respect to the Application up to the date of this decision.

Background

[10] The Fero Group is a national steel manufacturing and anti-corrosion service company and provides products and services to the oil and gas, mining, civil, marine, commercial and industrial sectors.

[11] The Fero Group includes a number of subsidiary entities including Fero.

[12] DYWIDAG-Systems International Pty Ltd trading as DSI Underground (DSI) purchased the Fero Group and its subsidiary entities including Fero on 1 October 2018.

[13] Following DSI’s acquisition of the Fero Group it undertook a review of the industrial arrangements at the Fero Group. DSI determined that the terms and conditions contained in the agreements were outdated and were hampering the capacity of the various subsidiary entities, including Fero, to attract and retain both employees and clients. DSI have, therefore, applied for each of these agreements to be terminated. Each of the applications to do so were allocated to these Chambers.

[14] If the agreements are terminated, DSI propose to engage employees under common law contracts underpinned by the relevant modern Awards.

[15] Separate decisions issued on the same date as this decision consider the termination of three other agreements covering other subsidiary entities of the Fero Group.

Legislation

[16] Subdivision D of Division 7 of Part 2-4 of the FW Act sets out the mechanism by which an enterprise agreement may be terminated after the agreement has passed its nominal expiry date.

[17] Section 225 of the FW Act provides that:

“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.”

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

[19] 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.”

Is it contrary to the public interest to termination the Agreement?

[20] Section 226(a) requires the FWC to be satisfied that it is not contrary to the public interest to terminate the Agreement.

[21] 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 standard. 1

[22] There is no positive onus on an applicant to persuade the FWC that there are positive benefits to the public interest arising from the termination. In Geelong Wool Combing Ltd 2Commissioner Wheelan said:

“… the Commission must be persuaded that termination is contrary to the public interest [and] in the absence of any effect of termination which is contrary to the public interest it is not necessary to persuade the Commission that there are positive benefits to the public interest arising from the termination.”

[23] 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

[24] 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;

…”

[25] 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.”

[26] The ascertainment of what is not in the public interest does not involve the mere identification of a consequence of the termination of the agreement that is arguably contrary to the public interest. The ascertainment of the public interest may involve balancing countervailing public interests. 4

[27] Fero submits that there are no matters contrary to the public interest in terminating the Agreement and that rather, there are factors that are in the public interest in terminating the Agreement that may be considered by the FWC.

[28] For example, Fero submits that the conditions provided for in the Agreement are outdated and inconsistent with the objects of the FW Act to provide for “fair and relevant” terms and conditions.

[29] Furthermore, Fero says that in most instances the default Awards under which Employees would otherwise be employed provide better capacity for workforce flexibility and improved productivity which are key objectives of the FW Act

[30] Fero also submit that through the termination of the Agreement they will be able to attract and retain staff by competing on a level playing field with their competitors, which will positively impact Fero’s ability to contribute to national economic prosperity.

[31] Based on the submissions of Fero and the evidence before me, I am satisfied that it is not contrary to the public interest to terminate the Agreement.

What are the views of the Employees covered by the Agreement?

[32] Fero tendered evidence of the consultation which it has undertaken to ascertain the view of the Employees covered by the Agreement. Employees were notified of the proposal to terminate the Agreement at onsite meetings. Employee Representatives for each work area were provided with hard copies of the presentation made to workers. Based on the questions raised by those who attended the meetings, a FAQ sheet was prepared and circulated to Employees. Additional meetings attended by a translator were conducted for employees for whom English was not their first language.

[33] Fero have undertaken inquires to ensure that the termination does not adversely impact on the visa status of Employees holding work visas.

[34] Fero has kept the Employee Representatives updated on the progress of the Application and provided regular updates to Employees at Tool Box meetings. According to Ms Cook voting by the Employees indicated majority support for the Application.

[35] The Directions required Fero to provide a copy of the materials filed by Fero in accordance with the Directions and a copy of the Directions to each of the Employees. The Directions contained an invitation for any Employees who wished to be heard in relation to the Application to contact Chambers. None of the Employees contacted Chambers by the date specified in the Directions or by the date of this decision seeking to be heard in relation to the Application.

What are the views of the Employee Organisation covered by the Agreement?

[36] Ms Cook gave evidence that the Australia Metal Workers Union (AMWU) was invited to attend the Employee consultation meetings and to provide feedback. According to Ms Cook, the AMWU have not raised with Fero any concerns or objections to the Application.

What are the views of the Employer covered by the Agreement?

[37] Fero believes that the Agreement should be terminated because the Agreement is outdated and unsuitable and that terminating the Agreement will put them on an even playing field with their competitors as well as improve their ability to attract and retain staff.

What are the circumstances of the Employees covered by the Agreement?

[38] Fero submits that as a consequence of Employees, moving away from the Agreement and on to common law contracts underpinned by modern Awards Employees will benefit in a variety of ways including that:

a. Employees will be given the opportunity to earn overtime after 38 hours, not 40 as provided in the Agreement.

b. Employees will access to automatic wage rate reviews, not available under the Agreement, providing more competitive remuneration.

c. There will be clearer, less ambiguous job classifications.

[39] Modelling conducted by Fero and provided to the FWC indicates that Employees will be better off under the proposed common law contracts than they are under the Agreement.

[40] DSI have also agreed to provide the following undertaking:

“DIS Underground, on behalf of its Fero subsidiaries, undertakes to ensure that all Fero employees who were the employed under the relevant Enterprise Agreements that have been terminated by the Fair Work Commission shall, upon the effect of the termination of those Enterprise Agreements, be paid in accordance with the proposed hourly pay rates set out in paragraphs 5 and 6 (as appropriate) of the Submissions provided by DSI to the Commission on 30 July 2020.”

What are the circumstances of the Employer covered by the Agreement?

[41] Fero says that terminating the agreement will allow them to be placed on an even playing field with their competitors and be better placed to attract and retain staff. Furthermore, it will permit Fero to effectively contribute to enhanced productivity and economic growth in economically critical sectors of the Australian economy.

Is it appropriate to terminate the Agreement taking into all the circumstances?

[42] In assessing the views and circumstances of the parties it is important to remember that:

“Taking into account the views and circumstances of the parties involves far more than an expression of their views in support or opposition to termination. It should involve a reason for their views and the validity of their concerns.” 5

[43] I am satisfied that the views of Fero that the Agreement should be terminated are valid. The Agreement has past its nominal expiry date. The Agreement does not reflect current industry standards. Furthermore, terminating the Agreement will provide greater flexibility and less ambiguity for both Fero and the Employees, whilst allowing Fero to attract better and retain workers. Fero has engaged in extensive discussions with those Employees who will be impacted, and there is no evidence before me of opposition to the termination by Employees or the union with coverage of those Employees.

Conclusion

[44] For the reasons enunciated above, I am satisfied that it is not contrary to the public interest to terminate the Agreement. 

[45] Taking into account all the circumstances, including the views and circumstances of Fero and the Employees I am satisfied that it is appropriate to terminate the Agreement.

[46] Accordingly, the Agreementis terminated. The termination is to take effect on and from midnight on Friday 11 September 2020 in order to allow Fero to make the necessary adjustments to its payroll systems.

[47] An Order to this effect will be issued in conjunction with this Decision.

DEPUTY PRESIDENT

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

 2   (AIRC) 5 September 2003.

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

 4   Queensland Electricity Commission; Ex parte Electrical Trades Union of Australia (1987) 61 ALJR 393.

 5   Energy Resources Australia Ltd v Liquor, Hospitality and Miscellaneous Union[2010] FWA 2434,[16].

Printed by authority of the Commonwealth Government Printer

<AE405078  PR721905>