Greenacres Disability Services Ltd T/A Greenacres Disability Services
[2023] FWC 1545
•27 JUNE 2023
| [2023] FWC 1545 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.225—Enterprise agreement
Greenacres Disability Services Ltd T/A Greenacres Disability Services
(AG2023/1364)
GREENACRES ENTERPRISES COLLECTIVE AGREEMENT 2014
| Social, community, home care and disability services | |
| COMMISSIONER MATHESON | SYDNEY, 27 JUNE 2023 |
Application for termination of the Greenacres Enterprises Collective Agreement 2014
On 11 May 2023, Greenacres Disability Services Ltd T/A Greenacres Disability Services (Applicant) filed an application (Application) pursuant to s.225 of the Fair Work Act 2009 (Cth) (Act) to terminate the Greenacres Enterprises Collective Agreement 2014 (Agreement). A Form F24C – Declaration in relation to termination of an enterprise agreement after the nominal expiry date (Form F24C) was filed in support of the Application.
The Agreement is a single enterprise agreement. It was approved by Commissioner Cambridge on 11 November 2014.[1]
The nominal expiry date of the Agreement is 18 November 2017.
Legislation
The relevant provisions of the Act 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.”
Consideration – s.225
Is the Applicant an employer covered by the Agreement?
The Applicant is Greenacres Disability Services Ltd with the ABN 93 001 157 688 and trading name ‘Greenacres Disability Services’. The employer covered by the Agreement as described in clause 4 of the Agreement is ‘Greenacres Disability Services’, having the same ABN as the Applicant. Having considered the materials before me, I am satisfied that the Application was made by an employer covered by the Agreement and that the Applicant has standing to make the Application.
Has the Agreement passed its nominal expiry date?
Clause 6 of the Agreement provides that the Agreement will nominally expire 3 years after commencement, being 18 November 2017.
Having considered the materials before the Commission and clause 6 of the Agreement, I am satisfied the Agreement has passed its nominal expiry date.
Consideration – s.226(3) – views of employees, each employer and each employee organisation covered by the agreement
Section 226(3) of the Act provides that in deciding whether to terminate the Agreement, the Commission must consider the views of the following covered by the Agreement:
(a)the employees (unless there are no employees covered by the Agreement);
(b)each employer;
(c)each employee organisation (if any).
On 17 May 2023 the Commission set out directions requiring that the Applicant send a copy of an email drafted by the Commission to employees, employee organisations and other employers covered by the Agreement together with the application and documents relevant to the application. The email drafted by the Commission explained the considerations the Commission needs to have regard to in deciding whether to terminate the agreement and invited views of those covered by the agreement, including employees, employers and employee organisations. An extension to comply with the directions was sought and granted. On 2 June 2023 Mr Chris Christodoulou of the Applicant provided a Statutory Declaration to the Commission confirming compliance with the directions.
No employee or employer covered by the Agreement raised any objections in relation to the application. In its Form F24D the UWU stated that it supported the termination of the Agreement provided that additional entitlements were preserved relating to the role of the union as per clause 11 of the Agreement and trade union training entitlements as per clause 39 of the Agreement. The Applicant provided undertakings preserve these entitlements.
Consideration – s.226(4) – bargaining related matters
Section 226(4) of the Act requires that in deciding whether to terminate the Agreement the Commission must have regard to:
(a)whether the application was made at or after the notification time for a proposed enterprise agreement that will cover the same, or substantially the same, group of employees as the existing agreement; and
(b)whether bargaining for the proposed agreement is occurring; and
(c)whether the termination of the existing agreement would adversely affect the bargaining position of the employees that will be covered by the proposed enterprise agreement.
It is declared in the Form F24C filed with the application that a process of making a proposed new enterprise agreement had not commenced and I am satisfied that none of the circumstances described in s.226(4) are present in relation to the current application.
Consideration – s.226(1)
Section 226 of the Act sets out the grounds upon which the Commission must terminate an enterprise agreement if an application is made under section 225. In particular, ss.226(1) and 226(1A) provide:
“226 Terminating an enterprise agreement after its nominal expiry date
(1) 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 the continued operation of the agreement would be unfair for the employees covered by the agreement; or
(b)the FWC is satisfied that the agreement does not, and is not likely to, cover any employees; or
(c)all of the following apply:
(i)the Commission is satisfied that the continued operation of the enterprise agreement would pose a significant threat to the viability of a business carried on by the employer, or employers, covered by the agreement;
(ii)the Commission is satisfied that the termination of the enterprise agreement would be likely to reduce the potential of terminations of employment covered by subsection (2) for the employees covered by the agreement;
(iii)if the agreement contains terms providing entitlements relating to the termination of employees’ employment – each employer covered by the agreement has given the Commission a guarantee of termination entitlements in relation to the termination of the agreement.
(1A) However, the FWC must terminate the enterprise agreement under subsection (1)
only if the FWC is satisfied that it is appropriate in all the circumstances to do so.”
Clause 3 of the Agreement provides that it:
“…shall govern the wages and conditions of all Employees of Greenacres Disability Services (the ‘Employer’) who are engaged in the performance of all work in or in connection with, or incidental to a “prescribed service”, “eligible organisation” or “eligible service” as defined by the Disability Services Act 1986 (Cth) (the ‘Disability Act’), as amended which operates a supported employment business enterprise which employs, and provides work for people with and without disability in either a small business, production facility, work area or work crew, regardless if that work is performed at the registered address or location of the Employer…”
Clause 4 of the Agreement provides that the Agreement shall be binding upon employees covered by the classification structures contained within the Agreement.
In Annexure A of the Form F24C the Applicant explains that the Agreement applies to employees working in the Australian Disability Enterprise (ADE) arm of the Applicant which:
- provides supported employment for people with a disability in a range of locations in the Illawarra/Shoalhaven region; and
- offers various commercial services to clients including packaging, labelling, shrink wrapping, assembly and manufacturing, processing of e-waste, cleaning, café and retail work;
- employs approximately 200 employees with a disability and who undertake supported employment as well as approximately 20 employees without a disability who provide support and training to those employees.
As there are employees covered by the Agreement, the Applicant does not seek to rely on s.226(1)(b) as the grounds for the termination of the Agreement. Rather, the Applicant seeks to rely on the grounds set out in ss.226(1)(a) and 226(1)(c).
Section 226(1)(a) – would the continued operation of the agreement be unfair for the employees covered by the agreement?
Changes impacting wage assessment tools
In Annexure A to the Form F24C, the Applicant provides some background to its submissions that the continued operation of the Agreement would be unfair for the employees covered by it. The Agreement adopts the ‘Greenacres Enterprises Wage Assessment Tool’ (GEWAT) which has been utilised by the Applicant to determine wages for supported employees during the life of the Agreement. The Applicant submits that there have been significant developments in relation the methodologies for setting wages for supported employees including:
- the decision in Nojin v Commonwealth and Another [2012] FWCFC 192 (Nojin) in which the Full Federal Court determined (by majority) that two employers had unlawfully discriminated against employees in breach of section 15 of the Disability Discrimination Act 1992 (Cth) through use of the ‘Business Services Wage Assessment Tool’ (BSWAT);
- applications were made to remove from the Supported Employment Services Award 2020 (SES Award) the BSWAT and all wage assessment tools that contained a competency component. This resulted in the removal of the BSWAT from the SES Award;
- the removal of wage assessment tools that contained a competency component from the SES Award was revisited during the 4 yearly review of modern awards with a Full Bench of the Commission ultimately finding that the wage setting methodology in the SES Award did not meet the modern awards objective and that it should be replaced with a new wages structure;
- from 30 June 2023, the SES Award will be extensively varied to introduce a new wage setting methodology for employees with a disability.
The Applicant submits that in light of these developments, it is apparent that from 30 June 2023, the wage setting methodology utilised by the Applicant will be outdated, potentially unlawful and inconsistent with the findings reached by the Commission following its consideration of wage assessment tools.
The Applicant pointed to the following observations made by the Commission about competency-based assessment tools during the 4 yearly review of modern awards:
“[314]…The Nojin litigation demonstrates that the work value element of the wage assessment of a disabled employee in an ADE environment should not proceed on the basis of notional core or industry competencies which have no substantive relationship to the classification descriptors for minimum pay rates in the applicable award or to the work actually performed by the employee. An assessment carried out on this basis will be likely to be inherently disadvantageous to and thereby discriminatory towards intellectually disabled employees.”[2]
The Applicant also pointed to the specific consideration of the Greenacres Association Competency Based Wages System upon which the GEWAT is based. In this regard the Full Bench observed:
“[328] Although the Greenacres tool nominally operates by reference to SES Award rates of pay, it is in reality a self-contained, autonomous classification system which operates independently of the SES Award. The five-level classification structure, and the process by which jobs are assigned to those classifications by reference to the tasks, skills and underpinning work skills utilised, have no real reference point in the SES Award…
[329] The percentage of the award rates assigned to Level E, and to each of the other wage levels, have been determined externally to the award-making process. These percentages appear to be arbitrary, so that for example it is unclear why a Level E employee (who, as discussed, appears to undertake equal to or exceeding a Grade 2 SES Award employee) is assigned a maximum 55 percent of the award rate, which thus forms the upper limit of the whole structure. On its face, it appears that a disabled employee who would qualify at Grade 2 in the SES Award by reference to the tasks performed by the employee may, by the use of the tool, be paid significantly less than minimum pay rate for Grade 2 (or Grade 1) under the SES Award. By permitting the use of the Greenacres tool, the SES Award in effect authorises the employer to use a method of wage fixation for disabled employees which effectively was designed and established and operates independently to the modern award system and is in some respects inconsistent with it. There is no analogue of this in the modern award system applicable to non-disabled employees.
[330] We emphasise that this conclusion is not intended to be read as a finding that, on the evidence, any disabled employee employed by an ADE using the Greenacres tool has not in actuality been paid a wage rate that is objectively appropriate having regard to the employee’s disability. The evidence before us did not descend to the circumstances of individual employees. Our conclusion is essentially one based upon a conceptual or “desktop” analysis of the Greenacres tool compared to the SES Award.”
Clause 19.4.1 of the Agreement provides:
‘The wages of supported wage employees shall be assessed in accordance with the Greenacres Enterprises Wages Assessment Tool (GEWAT) as per Schedule B of this Agreement’.
The Applicant submitted that if the Agreement was to continue to apply, it would therefore be obliged to apply the GEWAT as the Agreement does not allow it to utilise a different wage setting methodology.
The Applicant submitted, with reference to the context described above, the ongoing use of the GEWAT as a tool for determining wages for supported employees would likely be unfair to employees for a range of reasons, including:
(a)neither the GEWAT nor the Greenacres Association Competency Based Wages System will be an approved wage assessment tool from 30 June 2023 and both tools will be inconsistent with the wage setting methodology set out in the SES Award from that date onwards;
(b)the efficacy of the GEWAT as a wage setting tool has not been endorsed by the Commission and rather, the potential for inconsistent or unfair wage outcomes has been raised by the Commission;
(c)the GEWAT (and other wage assessment tools) have been found not to meet the modern awards objective and will be removed from the SES Award from 30 June 2023;
(d)any ongoing use of wage assessment tools such as the GEWAT may lead to claims that the tools operate unfairly to employees (or certain classes of employees) due to potentially inconsistent or unfair wage outcomes;
(e)any ongoing use of wage assessment tools such as the GEWAT may lead to litigation (similar to that in Nojin) or arguments that the operation of the GEWAT is discriminatory.
Section 206 considerations
The Applicant also submitted that the ongoing operation of the Agreement beyond 30 June 2023 would be unfair to employees due to the operation of s.206 of the Act. Section 206 of the Act has the effect that if an enterprise agreement applies to an employee and a modern award covers the employee, an employee’s base rate of pay under the agreement must not be less than the base rate of pay that would be payable under the modern award if it applied to them.
The Applicant submitted that in order for the Applicant to ensure rates determined under the Agreement do not offend s.206 it would have to apply both the GEWAT and the new SES Award structure to each supported employee. The Applicant submitted that in addition to being an unduly burdensome process for the Applicant, employees would be subjected to two different assessment processes, these processes are often stressful and confusing for supported employees and the requirement for multiple assessments would create a further level of unfairness to employees.
Impact of termination on wage rates
If the Agreement is terminated, the SES Award will apply to supported employees. The Applicant submitted that the transition from the Agreement to the SES Award will not and cannot result in any supported employee’s wage rate being reduced due to transitional arrangements in the SES Award that will come into effect from 30 June 2023 and in particular the following provision:
“H.1 No reduction in hourly wage rate
An employer shall not reduce the hourly wage of any employee employed as at 1 January 2023 by reason of their:
H.1.1 classification or reclassification into Grade A or B; or
H.1.2 initial SWS assessment in the period from 30 June 2023 to 30 June 2026”.
The Applicant submitted that the above provisions operate to prevent supported employees from having their wages reduced as a result of the implementation of the new Award wages structure.
Additionally, the Applicant has provided an undertaking which states:
“3.In the event that the Agreement is terminated, Greenacres undertakes that employees’ existing hourly rates of pay will be maintained and no employee’s hourly rate of pay will be reduced as a result of the Agreement terminating.”
Other above-Award conditions
The Applicant provided undertakings. The United Workers’ Union (UWU) filed a ‘Form F24D – Declaration in response for termination of an enterprise agreement after the nominal expiry date’ (Form F24D). As noted above, in its Form F24D the UWU stated that it supported the termination of the Agreement provided that additional entitlements were preserved relating to the role of the union as per clause 11 of the Agreement and trade union training entitlements as per clause 39 of the Agreement. The Applicant subsequently provided amended undertakings which are attached to this decision and provide:
“2. In the event that the Agreement is terminated, Greenacres undertakes that the following entitlements will be preserved and will continue to be provided to employees who are covered by the Agreement as of 30 June 2023 (the Relevant Employees):
(a) The Greenacres / Union Picnic Day as per clause 36 of the Agreement.
(b) The rostered days off arrangements as per clause 24.2 of the Agreement.
(c) The job sharing arrangements as per clause 16 of the Agreement.
(d) The redundancy entitlements as per clause 18.4 of the Agreement.
(e) The role of the Union entitlements as per clause 11 of the Agreement.
(f) The trade Union training entitlements as per clause 39 of the Agreement.”
Conclusion regarding s.226(1)(a)
I have considered the Applicant’s submissions and am satisfied that:
(a)the wage assessment tool prescribed by the Agreement will be inconsistent with the wage setting methodology set out in the SES Award from 30 June 2023;
(b)taking into account the observations made by the Commission about competency-based assessment tools during the 4 yearly review of modern awards, the application of the GEWAT as a wage setting tool has the potential disadvantageous wage outcomes for employees;[3]
(c)the application of multiple assessment processes under the Agreement and SES Award in order to meet obligations under s.206 of the Act may give rise to confusion for employees undergoing such assessment.
I am also satisfied that the Applicant’s undertakings will operate to largely preserve above award entitlements in the Agreement and ensure a supported employee’s hourly rate of pay will not be reduced as a result of the Agreement terminating.
In the circumstances of this matter and having regard to the context described above, I am satisfied that the continued operation of the Agreement would be unfair for employees covered by it.
Section 226(1)(c)
It is not necessary for the Commission to be satisfied that more than one of the grounds set out in s.226(1) of the Act have been met in assessing a termination application made under s.225. However, the Applicant has sought to rely on the grounds in both ss.226(1)(a) and (c) of the Act and for completeness I have addressed the s.226(1)(c) considerations below.
Section 226(1)(c)(i) - Would the continued operation of the Agreement pose a significant threat to the viability of a business carried on by the employer, or employers, covered by the Agreement?
The Applicant submitted that:
it is a medium sized not-for-profit, mission-based enterprise;
it does not have the financial or other resources to apply two separate wage setting methodologies for supported employees which would be required from 30 June 2023 if the Agreement remains in operation;
this requirement would result in the Applicant incurring additional expenses and administrative burden;
it may be exposed to potential litigation or claims that the Agreement unlawfully discriminates against certain employees and it does not have the resources to defend any such litigation;
there is a risk that any such litigation would lead to the Applicant needing to re-evaluate the operation of its supported employment services, leading to the potential loss of a significant number of employees with a disability.
The practical requirement to administer two wage setting methodologies will give rise to additional cost and administrative burden. However more fundamentally, I am satisfied that continued application of the GEWAT would expose the Applicant to the risk of litigation, particularly considering the findings in Nojin, that the GEWAT is a significant feature of the Agreement and that the GEWAT may otherwise be applied to the vast majority of employees covered by the Agreement who are employees with a disability and who undertake supported employment. Given the nature of the Applicant’s organisation being a not-for-profit, mission-based organisation with resource limitations, I am satisfied that the risk of litigation is a real one and were it to occur it may give rise to significant negative ramifications for the Applicant, including a potential need to re-evaluate Greenacres Industries, the Australian Disability Enterprise. In the circumstances of this matter, I am satisfied that the continued operation of the Agreement would pose a significant threat to the viability of a business carried on by the employer covered by the Agreement.
Section 226(1)(c)(ii) - Would the termination of the Agreement be likely to reduce the potential of terminations of employment covered by subsection 226(2) for the employees covered by the Agreement?
The Applicant submitted that, in the context of its submissions about the continuation of the Agreement posing a significant threat to the viability of a business carried on by the employer as summarised above, termination of the Agreement would reduce the potential of job losses. This is because it would remove the obligation on Greenacres to apply the GEWAT as the applicable wage assessment tool for supported employees and would require Greenacres to instead apply the new SES Award wage structure which comes into effect from 30 June 2023.
I have earlier found that I am satisfied that the risk of litigation is a real one and were it to occur it may give rise to significant negative ramifications for the Applicant, including a potential need to re-evaluate Greenacres Industries, its Australian Disability Enterprise. This raises the potential for the termination of employees undertaking the work for Greenacres Industries, the vast majority of which are employees with a disability, who undertake supported employment and to whom the GEWAT would apply. In the circumstances of this matter, I am satisfied that the termination of the Agreement is likely to reduce the potential of terminations of employment of the nature described in s.226(2)(a) of the Act.
Section 226(1)(c)(iii) - If the Agreement contains terms providing entitlements relating to the termination of employees’ employment, has each employer covered by the Agreement given the Commission a guarantee of termination entitlements?
The Agreement contains terms providing entitlements relating to the termination of employees’ employment.
Section 226A(1) sets out the description below in relation to a ‘guarantee of termination entitlements.
“Guarantee of termination entitlements
(1) A guarantee of termination entitlements is an undertaking given by an employer covered by an enterprise agreement that:
(a)is an undertaking that the employer will comply with subsection (3) if the agreement is terminated under section 226 and the employer terminates the employment of a protected employee for the termination of the agreement:
(i) at the employer’s initiative because the employer no longer requires the job done by the employee to be done by anyone, except where this is due to the ordinary and customary turnover of labour; or
(ii) because of the insolvency or bankruptcy of the employer; and
(b)is in writing; and
(c)meets any requirements relating to the signing of undertakings that are prescribed by the regulations”.
Section 226A(3) provides that for the purposes of paragraph (1)(a) (as set out above), the employer complies with this subsection, in relation to the termination of the protected employee’s employment, if the employer complies with the terms of the enterprise agreement that, if the agreement were still in operation, would have provided the employee with entitlements that:
(a)relate to a termination of the employee’s employment:
(i) at the employer’s initiative because the employer no longer requires the job done by the employee to be done by anyone, except where this is due to the ordinary and customary turnover of labour; or
(ii) because of the insolvency or bankruptcy of the employer; and
(b)except if the employee was an award/agreement free employee immediately before the termination of the employee’s employment—are more beneficial than the entitlements under a modern award that covered the employee in relation to the employment at that time.
Section 226A(2) provides that a ‘protected employee’ for a termination of an enterprise agreement under s.226 is an employee who would, but for the termination of the agreement, be covered by the agreement.
The Agreement sets out termination entitlements at clauses 17 and 18. These include:
- notice of termination as provided for in the National Employment Standards (NES) (clause 17.1);
- where the employer has given notice of termination to an employee, an entitlement to up to one day’s time off without loss of pay for the purpose of seeking other employment (clause 17.3, 18.7.1);
- a statement of service (clause 17.4);
- severance pay (clause 18.4);
- an ability of an employee to terminate their employment during the notice period when they have been given notice of termination in circumstances of redundancy (clause 18.6).
These Agreement entitlements would currently apply if there were a termination event of the nature described in s. 226A(1)(a) of the Act.
The Applicant submits that it provides a guarantee of termination entitlements to employees as a part of the application. While the Applicant has provided an undertaking that it will preserve and continue to provide to employees covered by the Agreement the redundancy entitlements as per clause 18.4 of the Agreement, it does not go beyond that. The SES Award does provide for notice of termination in accordance with the NES and equivalent provisions regarding the job search entitlement (Agreement clauses 17.3 and 18.7.1) and ability to terminate employment during the notice period (Agreement clause 18.6). However, an outstanding Agreement entitlement that does not appear to be dealt with by way of undertaking is the entitlement to a statement of service. A finding about whether 226(1)(c)(iii) has been satisfied in these circumstances is unnecessary given I am already satisfied that the continued operation of the Agreement would be unfair for employees covered by it.
Section 226(5) – other relevant matters
I have earlier found the risk of litigation arising from the continued application of the GEWAT prescribed by the Agreement is a real one that may give rise to a need to re-evaluate the Applicant’s Australian Disability Enterprise. I have also found this raises the potential for termination of employees undertaking the work for Greenacres Industries, the vast majority of which are employees with a disability and who undertake supported employment. The consequence of termination of employment for these employees may have a particularly acute impact on them and this weighs in favour of termination of the Agreement.
Section 226(1A) – Appropriateness
Section 226(1A) provides that the Commission must terminate the enterprise agreement under subsection 226(1) only if the Commission is satisfied that it is appropriate in all the circumstances to do so. One of the grounds for termination in s.226(1) of the Act has been met, the application is not opposed, there are no bargaining related concerns impacting the application and the Applicant has provided undertakings that largely preserve any above award entitlements.
Conclusion
Having regard to the requirements of s.226 of the Act and based on the material before the Commission, I am satisfied that the continued operation of the Agreement would be unfair for the employees covered by it and that it is appropriate to terminate the Agreement having regard to all the circumstances.
Pursuant to s.226 of the Act, the Agreement is terminated. In accordance with s.227 of the Act, the termination of the Agreement shall operate from 30 June 2023.
An Order to this effect has been issued concurrently with this decision.
COMMISSIONER
[1] [[2014] FWCA 7979]
[2] [2019] FWCFB 8179 at [319]-[330].
[3] [2019] FWCFB 8179 at [328] – [329].
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