Geelong Racing Club
[2023] FWC 3221
•5 DECEMBER 2023
| [2023] FWC 3221 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.222—Enterprise agreement
Geelong Racing Club
(AG2023/3813)
| Racing industry | |
| DEPUTY PRESIDENT COLMAN | MELBOURNE, 5 DECEMBER 2023 |
Application for approval of the termination of the Geelong Racing Club Grounds Maintenance Staff Agreement 2019 – application dismissed
This decision concerns an application made by the Geelong Racing Club (GRC) for the Commission to approve the termination of the Geelong Racing Club Grounds Maintenance Staff Agreement 2019 (Agreement). The application was made under s 222 of the Fair Work Act 2009 (Act) following a vote of employees that approved the termination. The Australian Workers’ Union (AWU) is covered by the Agreement. It opposes the application on the grounds that the Commission cannot be satisfied that the relevant legislative requirements have been met. The matter was programmed and the parties filed submissions in accordance with my directions. GRC and the AWU asked the Commission to determine the matter on the papers. I consider it appropriate to do so.
Section 222 provides that if a termination of an enterprise agreement has been agreed to by employees, a person covered by the agreement must apply to the Commission for approval of the termination. The application must be made within 14 days after the termination is agreed to, and must be accompanied by declarations that are required by the Fair Work Commission Rules. Section 223 requires the Commission to approve the termination of an agreement if it is satisfied of various matters. The section reads as follows:
“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.”
GRC submitted that the Commission should be satisfied that each of the requirements of s 223 had been met. It said that on 3 October 2023 it provided the employees covered by the Agreement with a written explanation that set out the effect of the termination of the Agreement. A copy of this document was provided to the Commission. The employees were also provided with a notice concerning the arrangements for a vote on the proposed termination, which would occur from 1.00pm to 1.30pm on 10 October 2023 by way of paper ballot. On 6 October 2023, managers conducted a meeting with employees to explain the termination of the Agreement and to answer any questions or concerns about the termination. GRC stated in its submissions that during the explanation it ‘again advised employees that it was the intent of the parties that the conditions of the enterprise agreement transfer over to contracts of employment’ (paragraph 28). Employees did not raise any questions or concerns. On 11 October 2023, all nine of the employees covered by the Agreement voted to approve the termination of the Agreement. On 17 October 2023, GRC lodged its application under s 222 in the Commission.
The AWU contended that the Commission could not be satisfied that the employer had complied with s 220(2), and that the requirement of s 223(a) was therefore not met. Section 220(2) requires that if an employer requests employees to approve a proposed termination of an agreement by vote, it must, before making the request, take all reasonable steps to notify the employees of the time and place at which the vote will occur, and the voting method (s 220(2)(a)). It must also ‘give the employees a reasonable opportunity to decide whether they want to approve the proposed termination’ (s 220(2)(b)). The AWU contended that the requirement of s 220(2)(b) had not been met because the employer’s explanation of the proposed termination of the agreement was defective, and employees did not have a proper understanding of the significance of terminating the Agreement.
The AWU pointed to a number of elements in the explanation document that it said were wrong or misleading, including the following:
· In relation to clause 28 of the Agreement, the explanation document stated that employees would continue to have a right to paid absences on public holidays, but it did not explain that, whereas the Agreement sets a 300% penalty for work that is performed on public holidays (clause 28.5), the penalty under the Racing Industry Ground Maintenance Award 2020 (Award), which would apply to employees if the Agreement were terminated, is only 250% (clause 20.5).
· The explanation document stated that there would be no change to personal leave, but in fact clause 37 of the Agreement provides employees with a full year of personal leave on each anniversary of an employee’s employment, while under the National Employment Standards, which alone would govern personal leave if the Agreement were terminated, personal leave accrues progressively with service during the year.
· As to the dispute procedure in clause 52 of the Agreement, the explanatory document stated that clause 29 of the Award would now provide the method for dispute resolution and as such there would be only ‘minor procedural changes’. It did not mention that the procedure in the Agreement has a broader scope, provides for arbitration of unresolved matters in the Commission, and applies the status quo until a dispute is resolved. The AWU said that the removal of these elements was a significant change that ought to have been brought to employees’ attention.
· Clause 19 of the Agreement incorporates a detailed disciplinary procedure that contains substantive protections for employees. The explanation document stated that while the procedure has not been included in the contract, there were ‘no changes here’ because the procedure would continue as a matter of GRC policy. However, it was not explained to employees that the procedure in the Agreement is enforceable against the company whereas the policy is not.
· Similarly, under clause 26 of the Agreement, track staff employees must be provided with meal vouchers on race days. The explanatory document stated that despite the omission of this matter from the new contract of employment, GRC committed to providing such meal vouchers, however it did not explain to employees that this commitment was not legally binding.
· The explanatory document wrongly stated that there would be no changes to accident make up pay following termination because the Accident Compensation Act would continue to apply, but that Act does not in fact provide for make-up pay, whereas clause 25 of the Agreement does.
In response, GRC contended that many of the above statements in the explanatory document were accurate. It said that it was correct to say that employees would be entitled to statutory public holidays, that employees would receive ten days of accrued personal leave per year, and that the disputes procedure in the Award would now apply. But this misses the point of the AWU’s submissions on these matters, which is that the explanation was incomplete and therefore misleading. The document did not tell employees that they would lose the existing entitlement to 300% loading for work on a public holiday and instead receive only a 250% loading under the Award, that personal leave accruals would now accrue only progressively, or that the Award disputes procedure was much more limited than that in the Agreement.
Similarly, GRC submitted that its explanation that the disciplinary procedure would continue as a matter of practice, and that it would continue to provide employees with meal vouchers, were accurate statements. But again, important detail was omitted, namely that these provisions would no longer confer legally enforceable conditions, but instead be matters of company policy. I note that point 6 in the introduction to the explanation document stated that if the termination were to be approved by the Commission, the Award would provide minimum entitlements. However, this falls short of explaining to employees that terms in the Agreement that the company might continue to observe as a matter of policy would not be legally binding.
GRC conceded that its explanation of accident make-up pay had been incorrect and stated that it would undertake to continue the accident make-up pay arrangements in clause 25 of the Agreement. It also stated that it was prepared to give an undertaking that existing and future employees employed in the classifications covered by the Agreement would retain the conditions in the Agreement following its termination.
GRC told the employees, apparently more than once, that it intended to transfer the conditions of employment from the Agreement to employees’ contracts of employment. However, it is clear that in various respects, this has not occurred, and a number of provisions of the Agreement that conferred guaranteed entitlements and which were enforceable under the Act are to be provided as a matter of practice or policy and will not be legally enforceable. It is necessary to consider the significance of this in respect of the requirement that employees have a reasonable opportunity to decide whether to terminate the Agreement, and whether concerns in this regard can be addressed by the proposed undertaking.
Section 220(2) does not require an employer to take all reasonable steps to explain to employees the effect of the termination of an agreement on their employment. It states rather that the employer must give employees a reasonable opportunity to decide whether they want to approve the proposed termination. The Act elsewhere does require employers to take reasonable steps to explain matters to employees (such as the terms of a new enterprise agreement or a variation of an agreement, and their effect – see s 180(5) and s 211). It is therefore doubtful whether an explanation of the consequences of a termination of an agreement can be regarded as an essential element of providing employees with a reasonable opportunity to decide whether to terminate the agreement, although providing an explanation may assist the Commission in reaching a state of satisfaction that employees have had a reasonable opportunity to decide whether to terminate the agreement. In principle though, an employer might simply invite employees to consider and compare for themselves the agreement that is to be terminated and the award that will underpin their employment following termination, together with the NES and the contract of employment. However, where an employer decides to explain the significance of terminating the agreement, the explanation should be accurate and not apt to mislead. That was not the case here because GRC told employees that the intention was to reflect the terms of the Agreement in contracts of employment, but a number of important conditions were not included in the contract and are proposed to be observed as a matter of policy. Perhaps the nine employees who voted to approve the termination are not concerned about this, but there is no evidence or information to this effect. The shortcomings in GRC’s explanation of the termination cause me to doubt that employees had a reasonable opportunity to decide whether they wanted to terminate the Agreement. Can this be remedied by an undertaking?
Unlike applications for approval of an enterprise agreement or a variation to an agreement, there is no statutory mechanism for undertakings to be provided to the Commission in relation to approval requirements relating to termination applications under s 222. In principle, I see no reason why the provision of undertakings might not affect the Commission’s view of whether employees were afforded a reasonable opportunity to decide whether they wanted to approve the termination of an agreement. It might be asked how an undertaking given in the present could affect the Commission’s assessment of whether employees had a reasonable opportunity in the past. However, the assessment of s 220(2) occurs at the time that the Commission considers the application. If an undertaking makes good a representation made by the employer to employees which might otherwise have been misleading, the Commission might be persuaded that in all the circumstances the employees did have a reasonable opportunity to decide whether to terminate the agreement. However, in the present case, part of the representation to employees was that their conditions under the Agreement would continue to have legal effect and be enforceable; they would ‘transfer over’ to employees’ contracts of employment. An undertaking to the Commission to apply those conditions would not do these things. Unlike an undertaking given under s 190, it would have no statutory force. And it would have no legal status under the general law.
Further, one of the terms of the Agreement is that it will prevail over the incorporated Award to the extent of any inconsistency (see clause 3). This clause, whether applied by policy or included in a contract of employment, could have no effect. Policy and contract cannot displace the operation of an award. This would not matter if clause 3 had no practical work to do. However, in certain respects, the working arrangements contained in the Agreement are inconsistent with the Award, and are only able to be followed because those terms are found in an enterprise agreement. For example, clause 21 of the Agreement states that the hours of work shall be 38 per week, to be worked between the hours of 6.00am and 6.00pm on any day of the week, usually Monday to Friday, by agreement. This is the span of ordinary hours under the Agreement. Under the Award, the span of hours is 6.30am to 6.30pm (clause 13.1(a)), and ordinary hours can be worked on a weekend only where the employer conducts an event which is open to the public (clause 13.1(e)). It would not be possible to ‘transfer over’ all of the terms of the Agreement to employees’ contractors, or to effectively undertake to observe all of those terms because, unlike the Agreement, the contracts or undertaking could not displace the operation of the Award in relevant respects.
The explanatory document stated that it was not a complete explanation, however there is no evidence that the inaccuracies above were rectified through any other explanations. GRC said that there was no evidence that any employees were in fact misled. However, in the face of these issues, I find that I cannot be satisfied that employees had a reasonable opportunity to decide whether they wanted to approve the termination of the Agreement. I cannot conclude with confidence that employees were not misled, even if unintentionally, about the effect of the termination of the Agreement on the terms and conditions of their employment.
As I am not satisfied that the employer complied with s 220(2), I cannot approve the termination of the Agreement. The application is dismissed.
DEPUTY PRESIDENT
Determined on the papers
Printed by authority of the Commonwealth Government Printer
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