Hays Specialist Recruitment (Australia) Pty Ltd

[2020] FWCA 404

[2020] FWCA 404

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.225—Enterprise agreement

Hays Specialist Recruitment (Australia) Pty Ltd
(AG2019/4136)

HAYS SPECIALIST RECRUITMENT P/L AND CEPU - PLUMBING DIVISION (VIC) LABOUR HIRE ENTERPRISE AGREEMENT 2011-2015

Publishing industry
DEPUTY PRESIDENT COLMAN	MELBOURNE, 28 JANUARY 2020

Application for termination of an enterprise agreement after its nominal expiry date – labour hire business - company unable to win work with current agreement – no current employees employed under the agreement – agreement terminated.

[1] Hays Specialist Recruitment (Australia) Pty Ltd (Hays) has applied under s 225 of the Fair Work Act 2009 (Act) to terminate the Hays Specialist Recruitment P/L and CEPU - Plumbing Division (Vic) Labour Hire Enterprise Agreement 2011-2015 (Agreement). The Agreement applies to work performed by persons employed by Hays in Victoria as plumbers and in certain other capacities identified in clause 2 of the Agreement. The Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU) is covered by the Agreement. The nominal expiry date of the Agreement was 31 October 2015.

[2] Hays operates a labour hire business, in which it employs workers for particular periods and deploys them on temporary assignments with its clients. Hays does not currently employ any employees under the Agreement. The company says that it is no longer able to win work in the plumbing sector in Victoria because of the application of the Agreement to any employees it might seek to deploy on an assignment, which makes it uncompetitive. In particular, Hays says that its competitors’ enterprise agreements do not apply to the ‘cottage and housing industry’, due to an exclusionary provision in the scope clauses of their instruments. The Agreement does not contain such a provision.

[3] The CEPU opposes the termination of the Agreement. It acknowledges that there are currently no employees covered by the Agreement but contends that the company may hire such employees again, and that if it does so, they should be employed under the Agreement. The union submits that if the Agreement is terminated, future employees would be covered by the Award, which is significantly less generous than the terms of the Agreement.

[4] Sections 225 and 226 of the Act provide 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.”

‘Not contrary to the public interest’

[5] I will first address the question of whether I am satisfied that termination of the Agreement is ‘not contrary to the public interest’ (s 226(a)).

[6] The ‘public interest’ refers to matters that might affect the public as a whole, such as the achievement or otherwise of the object of the Act, employment levels, inflation, and the maintenance of proper industrial standards.¹ The public interest is distinct in nature from the interests of the parties, though those interests may be simultaneously affected. The object of the Act set out in s 3 is to provide a balanced framework for cooperative and productive workplace relations that promotes national economic prosperity and social inclusion for all Australians. The object is to be achieved, among other things, by ensuring a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions, and by achieving productivity and fairness through an emphasis on enterprise-level collective bargaining. Section 578 requires that in performing functions or exercising powers, the Commission must take this object into account.

[7] Hays submits that it is not contrary to the public interest to terminate the Agreement. It says that, if the Agreement is terminated, any employees engaged to perform work by the company in the plumbing sector in Victoria would be covered by the Plumbing and Fire Sprinklers Award 2010 (Award) and the National Employment Standards (NES), which constitute a guaranteed safety net of fair, relevant and enforceable minimum conditions of employment.

[8] Hays contends that, while the Award will prescribe the minimum terms and conditions of employment, the actual conditions of employment are likely to exceed those in the Award, because in order to attract and successfully hire employees in the sector, Hays will need to pay higher, market rates of pay. The evidence of Mr Austin Blackburne, the company’s regional director, was that the market rate for work of the relevant kind is around $40 per hour.

[9] Hays also says that the termination of the Agreement will provide further opportunities for it to employ plumbers for assignments in Victoria. It says that this consideration suggests that termination of the Agreement is positively in the public interest.

[10] The CEPU did not advance any explicit contention that the termination of the Agreement would be contrary to the public interest. I have taken into account the union’s general submissions as to why the Agreement should not be terminated for the purpose of considering whether termination of the Agreement would be contrary to the public interest.

[11] Section 226(a) does not require the Commission to be satisfied that the termination of an enterprise agreement is in the public interest. Instead it sets a lower requirement. The Commission must be satisfied that it is not contrary to the public interest to terminate the agreement. Having regard to all the circumstances, I cannot identify any considerations that would support a conclusion that terminating the Agreement would be contrary to the public interest. I am satisfied in the present case that it is not contrary to the public interest to terminate the Agreement. The first limb of s 226 is therefore made out.

‘Appropriate’

[12] I am required to consider whether it is ‘appropriate’ to terminate the Agreement, taking into account all the circumstances, including the views of the employees, each employer and each employee organisation covered by the Agreement, and the circumstances of those employees, employers and organisations, including the likely effect that the termination will have on each of them.

[13] The view of the employer is that the Agreement should be terminated. The view of the one organisation covered by the Agreement, the CEPU, is that the Agreement should not be terminated. There are no relevant employees whose views, or circumstances, may be taken into account.

[14] Taking into account the views of relevant parties includes consideration of the rationales offered in support of those views. The views with which the Act is concerned are views about the application to terminate the agreement. The circumstances of the parties and the likely effects of termination on those parties may inform the views, but they are also to be separately considered.

[15] The evidence of Mr Blackburne, which I accept, establishes that the company has a sound reason to seek the termination of the Agreement. Hays is unable to win work in the contract plumbing sector in Victoria because of the continuing application of the Agreement, which makes the company uncompetitive. Mr Blackburne said that, since January 2019, Hays has only placed ten employees on assignments with clients under the Agreement and that since approximately June 2019, Hays has not employed anyone under the Agreement. Mr Blackburne’s evidence was that the company has been told by potential clients that the rates of pay and conditions of employment prescribed by the Agreement are not competitive with those of other labour providers in the sector. He referred to five examples from recent months where potential customers have approached Hays for work, but after being told about the conditions in the Agreement, have decided not to engage Hays. Mr Blackburne said that Hays has not won a tender for residential plumbing work in Victoria for over two years, and that unless the Agreement is terminated, it will not be commercially viable for Hays to continue efforts to work in the sector.

[16] The CEPU disputed the impact of the Agreement on the company’s ability to win work. It said that the key rate of pay in the Agreement was $43 per hour, which is only marginally above what Mr Blackburne said was the market rate. However, Mr Blackburne explained in cross-examination that it was necessary to consider not just the bare rate of pay under the Agreement, but penalties and loadings, in particular the more generous overtime arrangements.

[17] The CEPU contended that the company’s competitors appear to have no difficulty winning work, and that some employ many hundreds of employees. However, the company submitted that the reason for this is that these competitors have exclusions in their enterprise agreements for housing industry work. Mr Blackburne referred to the examples of two companies which he described as Hays’ key competitors in the plumbing sector in Victoria, Protech Personnel and Frontline Human Resources. They are respectively bound by the Protech Personnel (Vic) Pty Ltd and CEPU – Plumbing Division Victorian Branch Labour Hire Enterprise Agreement 2015-2019 and the Frontline Human Resources and CEPU – Plumbing Division Victorian Branch Labour Hire Enterprise Agreement 2016-2019. Clause 2.5.5 in each of these agreements states that the agreement does not apply to the ‘cottage / housing industry’.

[18] The CEPU also submitted that, although there are no employees currently employed under the Agreement, this might change, and that if it does, those employees would be worse off under the Award than they would have been under the Agreement, even if market-based over award payments were provided to them.

[19] I note that there is no evidence or reason to infer that the company will employ employees under the Agreement any time soon, as it has no work for them to do. It appears to me that the company is only likely to employ plumbers in Victoria if the Agreement is terminated, because only then will it be competitive for work in the sector. The fact that plumbers employed by Hays in the future might receive less generous conditions under the Award than former employees have received in the past under the Agreement is not a consideration that tells against the appropriateness of terminating the Agreement. The termination of an enterprise agreement will often result in a reduction in conditions of employment, and this of itself does not necessarily weigh against an application to terminate an agreement. In the present matter, there are no current employees who will be adversely affected. And a prospective employee would not suffer a reduction, because such an employee would never have been covered by the Agreement. Further, s 226 requires the Commission to take into account the views and circumstances of ‘employees covered by the agreement’, not those of prospective employees. Even if the circumstances of prospective employees are properly to be taken into account, I do not consider them to tell against the termination of the Agreement, because there are not likely to be any prospective employees in the first place unless the Agreement is terminated.

[20] The CEPU contended that the parties have been seeking to negotiate a new enterprise agreement and that this process should simply continue without the Agreement being terminated. I understand the union to contend that terminating the Agreement may adversely affect the bargaining in some way, perhaps by changing the relevant baseline or reference point for negotiations. However, the company and the union confirmed at the hearing that they remain open to further negotiations on a new enterprise agreement, and there is nothing that suggests to me that the termination of the agreement will be an impediment to bargaining. Further, the Full Bench in Aurizon rejected the proposition that it will generally not be appropriate to terminate an agreement if bargaining for a replacement agreement is ongoing and there remains a reasonable prospect of a new agreement. 2

[21] Taking into account the views of the persons referred to in s 226(b) that have been presented to the Commission, and the circumstances of those persons, as well as the effect that termination will have on each of them, I consider that it is appropriate to terminate the Agreement. Termination will enhance the prospects of the continuation of the company’s operations in the plumbing sector in Victoria, and the associated opportunity for the company to employ workers. No-one will be adversely affected by the termination of the Agreement. Conditions that will apply to future employees might be less generous than those of the Agreement, but the award safety net and NES will apply as a minimum, and the necessary market rates will need to be offered. There is also a prospect that further negotiations will result in a new enterprise agreement that could be expected to enhance employment conditions.

[22] Hays contended that a further relevant consideration weighing in favour of a conclusion that it is appropriate to terminate the Agreement is the fact that the objects of the Agreement are no longer being met. Clause 7 of the Agreement states that the intentions of the parties to the Agreement are to provide for an enterprise agreement for the benefit of the business and employees, to improve job satisfaction and continuity of employment for workers, and to create a co-operative and productive enterprise environment. Hays submitted that the Agreement itself has become an obstacle to employment, and that none of these objectives can therefore be met. I accept this contention. One might even say that in this case, paradoxically, the objectives of the Agreement will be furthered by its termination.

Conclusion

[23] As I have concluded that it is not contrary to the public interest to terminate the agreement, and that it is appropriate to do so taking into account all the circumstances including those in s 226(b), the Act requires me to terminate the Agreement.

[24] Section 227 provides that, if an enterprise agreement is terminated under s 226, the termination ‘operates from the day specified in the decision to terminate the agreement.’ The company submitted that the specified day should be the date of the decision. I consider this to be the appropriate course. In many cases, it is reasonable to specify a later date, so as to allow parties to prepare for the cessation of operation of the agreement, but there is no reason to do so in the present case.

[25] The termination will operate from the date of this decision.

DEPUTY PRESIDENT

Appearances:

Ms R Preston of counsel for Hays Specialist Recruitment (Australia) Pty Ltd

Mr P Coffey for the CEPU

Hearing details:

2020

Melbourne

23 January

Printed by authority of the Commonwealth Government Printer

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1 Re Aurizon Operations Limited[2015] FWCFB 540 at [129]

 2   At [138]