Gemalou Pty Ltd T/A Bakers Delight Warrnambool Norfolk Plaza

[2017] FWCA 4984

[2017] FWCA 4984

FAIR WORK COMMISSION

decision

Fair Work Act 2009

s.225—Enterprise agreement

Gemalou Pty Ltd T/A Bakers Delight Warrnambool Norfolk Plaza

(AG2017/2926)

Gemalou Pty Ltd Enterprise Agreement 2009

Food, beverages and tobacco manufacturing industry
COMMISSIONER RYAN	MELBOURNE, 11 OCTOBER 2017

Application for termination of the Gemalou Pty Ltd Enterprise Agreement 2009.

1. Application has been made by Gemalou P/L on 19 July 2017 for the termination of the Gemalou Pty Ltd Enterprise Agreement 2009 (the Agreement) which has a nominal expiry date of 27 January 2014. The Agreement applies to employees of the Applicant employed at its Bakers Delight operation in Norfolk Plaza, Warrnambool, Victoria.

1. The relevant provisions of the Act are as follows:

“Subdivision D—Termination of enterprise agreements after nominal expiry date

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.”

1. The application in this matter was made by Mr Ivanecky, the proprietor of Gemalou P/L which operated the Bakers Delight franchise at Norfolk Plaza, Warrnambool, Victoria. Mr Ivanecky also filed a Form F24A – Statutory declaration in relation to termination of an enterprise agreement after the nominal expiry date. No Form F24C was provided by any employee who was covered by the Agreement.

1. The statutory declaration filed by Mr Ivanecky noted that the employees covered by the Agreement would revert to the terms and conditions of the General Retail Industry Award 2010 should the Agreement be terminated.

1. The Commission wrote to Mr Ivanecky on 25 July 2017 drawing to his attention the requirement in s226(b)(i) of the Act (that the Commission must take into account the views of employees covered by the Agreement) and provided Mr Ivanecky with an opportunity to provide material to the Commission which addressed the requirement of s.226(b)(i).

1. The Commission convened a hearing on 4 August 2017 and heard from Mr Ivanecky in support of the application. Mr Ivanecky indicated that he would gain the views of his employees by conducting a ballot of employees in relation to whether they approved the termination of the Agreement.

1. On 18 September 2017 Mr Ivanecky wrote to me advising that he had concluded a ballot of the employees and he said relevantly:

“I have finally received all vote ballots, and 15 staff members voted they would like our EA removed, whilst 12 staff members wanted the EA to remain.”

1. The Agreement was approved by the Commission in 2010. The Agreement provides for some permanent employees to be paid a loaded rate so that annual leave entitlements are cashed out and paid on a weekly basis as part of the loaded rate. These employees are able to take periods of annual leave but without pay.

1. In 2014 a Full Bench of the Commission in Re Canavan Building Pty Ltd [1] determined that enterprise agreements with clauses such as that in the Agreement could not be approved both because such clauses excluded the operation of the NES entitlements to paid annual leave.

1. Given that the device of using an enterprise agreement to buy out all entitlements to annual leave and personal/carer’s leave is clearly impermissible, the termination of the Agreement to remove this odious provision is most clearly in the public interest.

1. Mr Ivanecky advised the Commission that he had been advised by the franchisor to terminate the agreement. I note that the Agreement is in identical terms to other Bakers Delight enterprise agreements made around the same time. Some of these other Bakers Delight enterprise agreements appear to still be operating.

1. The Commission has taken into account the views of Mr Ivanecky and the views of the majority of employees covered by the Agreement, as required by s.226(b)(i) and the Commission has taken into account the circumstances of the employees and of Mr Ivanecky and Gemalou P/L including the likely effect that the termination will have on each of them and the Commission considers that it is appropriate to terminate the Agreement.

1. Further to the above findings, the Act requires that I terminate the Agreement. In accordance with s.227 of the Act, the termination will take effect from 11 October 2017.

Observation

1. There is observation I make in relation to the consequences flowing from both the decision in Re Canavan Building Pty Ltd and the Agreement and the current application for termination of the Agreement.

1. An application under s225 to terminate an enterprise agreement proceeds on the assumption that the agreement which is to be terminated was made and approved in accordance with the provisions of the Act. In the present matter I must proceed on the basis that until otherwise determined by a court or a Full Bench of this Commission the Agreement was validly made and approved.

1. However, quite clearly the Full Bench decision in Re Canavan Building Pty Ltd makes clear that this Agreement and other enterprise agreements which have the same or very similar terms could not have been validly approved by the Commission.

1. A practical consequence which may flow from the decision in Re Canavan Building Pty Ltd is that if any employee of Bakers Delight at Norfolk Plaza, Warrnambool and who has been covered by the Agreement initiated an underpayment of wages claim on the basis that the Agreement was never validly approved by the Commission and that the employee was entitled at all times to the benefit of the General Retail Industry Award 2010 or some other modern award, then any court following the logic of the decision in Re Canavan Building Pty Ltd could find in favour of the employee. It is unfortunate that the franchisor waited so long after the decision in Re Canavan Building Pty Ltd to advise Mr Ivanecky to terminate the Agreement. The potential situation facing Mr Ivanecky may also be facing other Bakers Delight franchisees who had or still have enterprise agreements in similar terms to the Agreement in this matter.

COMMISSIONER

[1] [2014] FWCFB 3202, (Ross J, Hatcher VP, Acton SDP, Cargill C, Wilson C, 29 May 2014) [55]–[57].  

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