Fresenius Medical Care Australia Pty Ltd
[2022] FWC 2088
•9 AUGUST 2022
| [2022] FWC 2088 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.222—Enterprise agreement
Fresenius Medical Care Australia Pty Ltd
(AG2022/861)
| Manufacturing and associated industries | |
| COMMISSIONER MCKINNON | SYDNEY, 9 AUGUST 2022 |
Application for termination of the Fresenius Medical Care, Smithfield Production, Global Manufacturing Quality and Supply Chain Enterprise Agreement 2019-2021.
On 24 March 2022, Fresenius Medical Care Australia Pty Ltd (Fresenius) applied for approval of the termination of the Fresenius Medical Care, Smithfield Production, Global Manufacturing Quality and Supply Chain Enterprise Agreement 2019-2021 (the Agreement). The application is made under section 222 of the Fair Work Act 2009 (Act).
The Agreement is a single-enterprise agreement and has a nominal expiry date of 31 December 2021. The Australian Worker’s Union (AWU) is covered by the Agreement.
The relevant provisions of the Act are as follows:
“222 Application for the FWC’s approval of a termination of an enterprise agreement
Application for approval
(1) If a termination of an enterprise agreement has been agreed to, a person covered by the agreement must apply to the FWC for approval of the termination.
Material to accompany the application
(2) The application must be accompanied by any declarations that are required by the procedural rules to accompany the application.
When the application must be made
(3) The application must be made:
(a) within 14 days after the termination is agreed to; or
(b) if in all the circumstances the FWC considers it fair to extend that period—within such further period as the FWC allows.
223 When the FWC must approve a termination of an enterprise agreement
If an application for the approval of a termination of an enterprise agreement is made under section 222, the FWC must approve the termination if:
(a) the FWC is satisfied that each employer covered by the agreement complied with subsection 220(2) (which deals with giving employees a reasonable opportunity to decide etc.) in relation to the agreement; and
(b) the FWC is satisfied that the termination was agreed to in accordance with whichever of subsection 221(1) or (2) applies (those subsections deal with agreement to the termination of different kinds of enterprise agreements by employee vote); and
(c) the FWC is satisfied that there are no other reasonable grounds for believing that the employees have not agreed to the termination; and
(d) the FWC considers that it is appropriate to approve the termination taking into account the views of the employee organisation or employee organisations (if any) covered by the agreement.
224 When termination comes into operation
If a termination of an enterprise agreement is approved under section 223, the termination operates from the day specified in the decision to approve the termination.”
Did employees have a reasonable opportunity to decide whether to terminate the Agreement?
On 3 March 2022, each of the nine employees who are covered by the Agreement were invited to attend an on-site information session at Smithfield where Mr David Bates, the representative of Fresenius and National Director – Workplace Relations for Workforce Engagement Solutions, gave a powerpoint presentation about a proposal to terminate the Agreement. Employees were also given a 15‑page document explaining key differences between the Agreement and the Manufacturing and Associated Industries and Occupations Award 2020 (the Award) which will cover and apply to employees if termination of the Agreement is approved.
On 11 March 2022, the employees were each given notice of a vote on the proposed termination of the Agreement. The notice included information about the time and place of the vote and the voting method to be used.
Voting on the proposed termination of the Agreement commenced and concluded on 16 March 2022. Nine employees cast a valid vote and all approved termination of the Agreement. I am satisfied that employees were given a reasonable opportunity to decide whether to terminate the Agreement.
Was the termination agreed to in accordance with subsection 221(1) or (2)?
Section 221 of the Act describes when the termination of an enterprise agreement is “agreed to”. In the case of a single-enterprise agreement, a termination is agreed to when a majority of the employees who cast a valid vote approve the termination.
I am satisfied that the termination of the Agreement was agreed to for the purposes of the Act. As noted above, all nine affected employees cast a valid vote and all voted to approve termination of the Agreement.
Are there any other reasonable grounds for believing that employees have not agreed to the termination?
There are no reasonable grounds for believing that the employees have not agreed to the termination. They each had a reasonable opportunity to consider the proposal for themselves and to ask questions throughout the period from 3 to 16 March 2022. They each made their own decision and communicated that decision by secret ballot over the course of the day on 16 March 2022. There is nothing in the materials before me to suggest that they did not have the capacity to make their decision in each case. Each of the nine affected employees cast a valid vote to approve the termination and the termination was approved unanimously.
Is it appropriate to terminate the Agreement taking into account the views of the AWU?
The AWU opposes the application to approve termination of the Agreement. Though it is covered by the Agreement, the AWU was excluded from the process through which employees “agreed to” the termination.
The exclusion of the AWU was deliberate and occurred in the context of the AWU seeking to bargain for a replacement enterprise agreement. It had been seeking to bargain since November 2021. On any objective view, Fresenius gave the impression, at least in 2021, that bargaining for a replacement agreement would occur.
On 12 December 2021, Mr Bates advised Ms Leah Tucker, AWU Organiser, that he was now acting as Fresenius’ bargaining representative during enterprise agreement negotiations. By prior arrangement with John Amiradaki, General Manager, Ms Tucker subsequently attended the Smithfield site to discuss the AWU’s log of claims with production employees of Fresenius. She also asked Mr Bates to issue the Notice of Employee Representational Rights (Notice) “as a matter of urgency”. Mr Bates did not respond to the request other than to say he was “currently reviewing” the matter and would “be in touch in due course”.
On 21 December 2021, Ms Tucker wrote to Mr Amiradaki to provide the AWU’s log of claims for the replacement agreement. Mr Bates was copied into the email. Ms Tucker made enquiries about whether the Notice had been issued and asked for a copy. Mr Bates was the one who replied.
In a letter dated 21 December 2021, Mr Bates raised concerns about events on site the previous day involving the AWU’s request for employees to be released for a union meeting and its advice that the log of claims would be sent directly to Mr Amiradaki. He scolded the AWU for requesting it to “round up” employees and bring them to the union meeting, asserting that it was not compelled under the Act to facilitate a union meeting of employees on Fresenius premises. He then said this:
“(b)on 12 December 2021, I formally notified you that I had been appointed as our client’s Bargaining Representative. It would, therefore, be inconsistent with the obligations imposed on the AWU by section 228(1)(f) of the Act for your union to fail to either “recognise” or “bargain with” this office. We accordingly note that your log of claims was emailed directly to our client with our office only copied-in. As per our email of 12 December 2021, please ensure all future EA-related correspondence is sent to this office in the first instance as our client does not wish to receive further direct communications from third parties (they can of course be copied).
Notwithstanding the above, we understand Mr Kerley also informed our client your union intends to conduct all further negotiations via email due to your small membership at our client’s site. I confirm we are happy to proceed on that basis and trust we can now all move forward and complete the upcoming negotiations efficiently.”
In my view, the letter of 21 December 2021 triggered a notification time for a proposed enterprise agreement because it advised that Fresenius was “happy to proceed” with bargaining for an enterprise agreement at the Smithfield site through the medium of email. In other words, it agreed to bargain. Both parties understood that the relevant proposed agreement was one to replace “the Fresenius Smithfield Production EA which is due to expire on 31 December 2021”.[1] Despite the notification time, a Notice was not issued to employees. The AWU office closed for Christmas and Ms Tucker took leave for the month of January 2022.
Separately but in the background, the AWU had been dealing with Fresenius in relation to redundancies at its warehouse. On her return from leave on 1 February 2022, Ms Tucker wrote to Mr Bates to wish him a happy new year and to ask about where things stood for the warehouse employees. She asked for a copy of correspondence that had been sent to employees on 25 January 2022.
On 2 February 2022, Ms Tucker wrote to Mr Bates to ask when they could arrange “a meeting to discuss the Enterprise Agreement for Fresenius Production employees.” Mr Bates replied on the same say. He asked Ms Tucker to cease copying Mr Amiradaki into her correspondence and then said:
“We note bargaining has not yet officially commenced and FMC is currently considering its options. We expect to be in touch with employees about this matter in the very near future.”
On 4 February 2022, there was further correspondence between Mr Bates and Ms Tucker in relation to bargaining for a replacement agreement. Ms Tucker urged him to issue the Notice as soon as possible. Mr Bates responded to the effect that FMC was currently considering its options and he would be “back in touch with an update in the very near future.” Despite this assurance, Mr Bates did not get back in touch with Ms Tucker with any update.
Ms Tucker then followed up with Mr Bates about the warehouse employees on 11 February 2022 at 1.23pm. Mr Bates replied at 4.42pm as follows:
“Dear Ms Tucker,
We trust you’re well.
Please note we are not required to correspond with you regarding this matter and, in any event, the consultation process formally ended earlier today.
Kind regards and all the best for the weekend.”
The email clearly offended Ms Tucker, because she responded at 5.05pm as follows:
“David
You really are a sad individual without a human bone in your body.
I am not sure what you are trying to achieve with your attitude but I am still assisting these guys whether you like it or not.
Regards”
In turn, Mr Bates became offended. He responded at 5.20pm:
“Dear Ms Tucker,
You will note all our correspondence to you has been courteous and professional. We have never – and would never – make personal remarks or deliberately set out to be offensive or rude. Such conduct has no place in the year 2022 and is, frankly, abhorrent.
You are, of course, very welcome to provide whatever assistance your members request from you.
As previously mentioned, the consultation process has now concluded and all employees have already been informed accordingly.
Finally, and for the avoidance of any doubt, no matter how rude you may choose to be, we will only ever treat you with courtesy and respect.
Yours faithfully”
Ms Tucker was not appeased. At 5.26pm she fired back:
“Go away little man and play with your toys. Tosser!!”
This was the last exchange between Fresenius and the AWU until 3 March 2022, when Ms Tucker wrote to two employees of Fresenius. Her letter prompted a “cease and desist” letter on the same day from Mr Bates, who reminded Ms Tucker of the exchange on 11 February 2022, noted that he had sought an apology from the AWU but none was either forthcoming or expected, and advised that no further direct correspondence would occur between Mr Bates or Fresenius and Ms Tucker. He welcomed any other AWU official “who shares our commitment to professional and respectful discussions” to contact him any time. He made no mention of the proposal to terminate the Agreement.
It is understandable that Mr Bates found the emails from Ms Tucker offensive. They were. And it was wrong of the AWU not to acknowledge this or take any steps to achieve a more professional approach from Ms Tucker. Its vigorous defence of her actions likely underpins Ms Tucker’s continuing and complete lack of remorse for the behaviour.
But one cannot read the emails in isolation or ignore what had come before. Despite repeatedly asking Mr Bates for updates about the warehouse redundancies, Ms Tucker had been kept in the dark. After sending a friendly email to Mr Bates on her return from leave, the response she received was itself offensive – a refusal to correspond other than to blithely remark that the process she had been inquiring about for so long had now concluded. There was nothing courteous or respectful about it.
Separately on 3 March 2022, Mr Bates attended the Smithfield site to present to employees of Fresenius about its proposal to terminate the Agreement. On 16 March 2022, employees were asked to vote to approve the termination and did so. The AWU was not notified by Fresenius or its employees of either the proposal or the vote.
It would be open to conclude that the reason Fresenius decided not to engage with the AWU in relation to the termination process was the exchange of emails on 11 February 2022 and the AWU’s subsequent refusal to acknowledge the inappropriate nature of Ms Tucker’s emails. However, in my view Fresenius was considering terminating the Agreement (and the end to any relationship with the AWU) before this time. The language used in Mr Bates’ email of 2 February 2022 contemplates a model of direct engagement with employees. On 25 January 2022, it had proceeded on this basis in relation to the warehouse redundancies.
Communications between Ms Tucker and Mr Bates in relation to the warehouse redundancies are relevant because they highlight the preference of Fresenius not to deal with the AWU. This explains why it also preferred termination of the Agreement (which covered the AWU) over its replacement or a ‘do nothing’ approach, as well as the subsequent decision not to alert the AWU to its proposal for termination.
A consequence of this choice was that the language used by Fresenius to explain its proposal to terminate the Agreement was skewed in favour of termination. There is nothing surprising about this approach – any proposal is usually accompanied by arguments in its favour. The important question is whether employees were misled by the explanation given.
Employees were given detailed information about the changes that would follow upon termination of the Agreement. While most key differences were explained in adequate detail, no mention was made to employees of the effect of termination on the AWU and its rights in relation to representation of employees under the Agreement. Little was made of the lower minimum terms and conditions that would apply to future employees who were employed under the Award compared to existing employees whose higher Agreement conditions and rates of pay were preserved.
Conclusion
For these reasons, I do not consider it appropriate to approve the termination of the Agreement. In late 2021, Fresenius led the AWU to believe that it would negotiate for a replacement agreement. In 2022, when it decided to adopt a different course, it chose not to communicate its decision to the AWU. It did not let the AWU know that it was proposing to terminate the Agreement instead of replacing it, even though the AWU had a direct interest in the outcome as an employee organisation covered by the Agreement. Nor was the effect on the AWU communicated to relevant employees.
Terminating the Agreement will result in less beneficial terms and conditions of employment for employees. Undertakings have been given to preserve more generous terms for employees which ameliorate, but do not eliminate, the potential for disadvantage. This is because the undertakings do not address all of the reductions in entitlements and only apply to employees who are covered by the Agreement on the date of termination.
Finally, and aside from seeking to avoid future dealings with the AWU, there is no obvious business case for the change. That is not to say there is none – but simply that if there is, it was not put before me.
The application to approve termination of the Agreement is dismissed. As there has been a notification time for the proposed agreement, Fresenius should issue a Notice to employees without delay.
COMMISSIONER
Appearances:
D Bates of Workforce Engagement Solutions for the applicant.
S Doumit for the Australian Workers’ Union.
Hearing details:
2022.
Sydney (by video):
June 8.
[1] Per the email from Ms Tucker on 23 November 2021.
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