Haps Hotels Pty Limited
[2023] FWC 3194
•4 DECEMBER 2023
| [2023] FWC 3194 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.225—Enterprise agreement
Haps Hotels Pty Limited
(AG2023/4122)
HAPS HOTEL PTY LIMITED ENTERPRISE AGREMENT 2010
| Hospitality industry | |
| COMMISSIONER MATHESON | SYDNEY, 4 DECEMBER 2023 |
Application for termination of the Haps Hotel Pty Limited Enterprise Agreement 2010
On 7 November 2023, Haps Hotels Pty Limited (Applicant) filed an application (Application) pursuant to s.225 of the Fair Work Act 2009 (Cth) (Act) to terminate the Haps Hotel Pty Limited Enterprise Agreement 2010 (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.
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
(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 FWC 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 FWC 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)the agreement contains terms providing entitlements relation to the termination of employees’ employment – each employer covered by the agreement has given the FWC 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.
…
(3) In deciding whether to terminate the agreement, the FWC 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).
…
(4) In deciding whether to terminate the agreement (the existing agreement), the FWC 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 enterprise 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.
(5) In deciding whether to terminate the agreement, the FWC may also have regard to any other relevant matter.
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?
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 3.1 of the Agreement provides that the Agreement will have a nominal term of 4 years. The Agreement was approved by Commissioner Thatcher on 23 September 2010.[1]
Having considered the materials before the Commission and clause 3.1 of the Agreement, I am satisfied the Agreement has passed its nominal expiry date.
Consideration – s.226
Section 226(1)(a) – is the continued operation of the agreement unfair for the employees covered by it
Section 226(1) of the Act sets out three grounds upon which an Agreement may be terminated after its nominal expiry date. There are employees covered by the Agreement and in seeking to have the Agreement terminated the Applicant relies on the ground set out in s.226(1)(a), i.e. that the continued operation of the Agreement would be unfair for the employees covered by it.
It is declared in the Form F24C that if the Agreement is terminated the Hospitality Industry (General) Award 2020 (Award) will instead apply to the employees currently covered by the Agreement. It is declared in the Form F24C filed with the application that while the base rates (which are loaded rates) in the Agreement satisfy s.206 of the Act (which requires that the base rate of pay in an enterprise agreement not be less than the base rate in the modern award), the rates in the Agreement are less than the rates that would be payable on weekends, public holidays and hours between 7pm and 7am. The Applicant also submitted that if the Agreement was terminated employees will also have the benefit of meal breaks provided under clause 16.5 of the Award.
Of note, the Agreement covers managers and provides for payment of an annual salary for employees who are ‘permanent’. The Award provides for payment of managerial staff under the general conditions of the Award and also includes a salaries absorption clause that enables employees within the Managerial Staff (Hotels) classification of the Award and who are paid a salary that is at least 125% of the minimum annual salary prescribed for this classification. The salary rate prescribed for a permanent manager in Schedule A of the Agreement is $47,226.40 and the casual hourly rate is $27.68. These are below the base rates in respect of ordinary hours for managerial staff in the Award however Schedule A provides that these rates would be subject to adjustment pursuant to s.206 of the Act.
I have compared the key provisions of the Agreement alongside those in the Award, identifying that:
notice of termination provisions in both instruments align with the National Employment Standards (NES) except that the Agreement provides that if an employee fails to provide the required notice or provide sufficient notice the Applicant may withhold the amount of outstanding pay that is the equivalent of the period of notice that would have otherwise applied and clause 5.5 of the Agreement purports to deem termination without notice in circumstances;
redundancy pay provisions in both instruments are broadly similar although the Agreement includes additional exclusions regarding redundancy pay related to transfer of business;
the Agreement enables averaging of 38 ordinary hours per week over a 26 week period whereas the Award provides further restrictions on how the average of 38 hours per week is to be worked at clause 15.1;
the Agreement provides penalty rates for additional hours worked but states at clause 7.4 that these do not apply to permanent employees. In contrast the Award provides entitlements to overtime for full time employees for time worked in excess of their ordinary hours (clause 28.2) and for part time employees in the circumstances described in clause 10.13;
clause 8.1 of the Agreement provides that changes to the roster may occur with 3 hours notice whereas clause 15.6 of the Award requires 7 days’ notice (absent mutual consent);
under the Agreement employees are engaged on an annual salary arrangement however this arrangement does not have the safeguards around salaries absorption prescribed by the Award (clause 25);
clause 10.4 of the Agreement provides that permanent employees who work a public holiday ‘will be entitled to additional pay at the Base Rate of Pay’ for each hour worked on the public holiday whereas the Award provides that full time and part time employees who work a public holiday are entitled to penalty rates of 225% or 125% plus additional annual leave the equivalent of the hours worked (clause 29);
both instruments provide for cashing out of annual leave however there are more safeguards around this in the Award;
under the Agreement the unpaid meal break provisions only apply to casual employees whereas under clause 16 of the Award meal break entitlements are prescribed for all types of employees;
there are a range of additional entitlements in the Award that are not in the Agreement;
the dispute resolution provisions in each instrument vary in that clause 24.5 of the Agreement provides for arbitration and the Award provides for consent arbitration;
certain leave provisions in the Agreement no longer align with the NES which have been amended since the Agreement came into effect.
Having regard to the provisions of the Agreement compared to the Award it is apparent that the Award entitlements are, considered as a whole, superior to those in the Agreement, particularly for those engaged on salaries under the Agreement and I am satisfied that the continued operation of the Agreement would be unfair for the employees covered by it.
Section 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).
Section 226(3) – views of employees, each employer and each employee organisation covered by the agreement
It is declared in the Form F24C filed with the application that:
on 29 October 2023 a letter was emailed to all employees covered by the Agreement setting out information about the application. A copy of that letter was attached to the Form F24C;
a comparison table was provided to employees comparing the key terms of the Agreement and the Award. A copy of the comparison table was attached to the Form F24C;
employees were invited to participate in an online survey to express views about the proposed termination of the agreement with 12 of the 13 employees covered by the Agreement participating and all 12 answering yes to the question “do you support the application to terminate the Haps Hotel Pty Limited Enterprise Agreement 2010”. Evidence of the survey results was attached to the Form F24C.
The Commission issued directions requiring that the Applicant:
- provide a copy of an email drafted by the Commission to employees, employee organisations and other employers covered by the Agreement together with documents relevant to the application;
- provide evidence of compliance with this direction.
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. The Applicant provided a Statutory Declaration to the Commission made by its representative confirming compliance with the directions.
No person covered by the Agreement raised any objections in relation to the application.
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 the process of making a new enterprise agreement has not started and I am satisfied that none of the circumstances described in s.226(4) are present in relation to the current application.
Section 226(5) – other relevant matters
It is declared in the Form F24C that while management employees are covered by the Agreement, non-management employees are employed under an agreement that sunsets on 7 December 2023. The Applicant said that termination of the Agreement together with sunsetting of the agreement covering non-managerial employees will result in synergy and a reduction in complexity as the Award will apply to all employees covered by it.
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.
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 employee 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 6 December 2023.
An Order to this effect has been issued concurrently with this decision.
COMMISSIONER
[1] [2010] FWAA 5092.
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