Health Services Union (Applicant) v Claro Disability Services Pty Ltd (Respondent)

[2024] FWCFB 244

[2024] FWCFB 244

FAIR WORK COMMISSION

DECISION

Fair Work (Transitional Provisions and Consequential Amendments) Act 2009

Sch. 3, Item 20A(4) - Applications to extend default period for agreement-based transitional instrument

Health Services Union

(Applicant)
V

Claro Disability Services Pty Ltd
(Respondent)

(AG2023/4552)

Health and welfare services industry
DEPUTY PRESIDENT SLEVIN COMMISSIONER CRAWFORD COMMISSIONER TRAN	SYDNEY, 30 APRIL 2024

Application to amend Application – s. 586. Application granted.

Introduction

1. The Health Services Union (HSU) applied pursuant subitem 20A(4) of Sch 3 to the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) (Transitional Act), to extend a number of Agreements that apply to disability services workers in regional Victoria (the HSU applications).

1. Amongst the HSU applications was the present application to amend the default period for The Disability and Support Services Certified Agreement 2005-2008 (2005 Agreement). The application was filed and served on 24 July 2023. The respondent Claro Disability Services Pty Ltd (Claro) informed the Commission on 8 December 2023 that the 2005 Agreement no longer operates as it was replaced by two agreements the AHC Residential Services (Victoria) Collective Agreement 2009-2012 (2009 Agreement) and the AHCS Collective Agreement 2008-2011 (2008 Agreement).

1. The HSU applications include an application to extend the default period for the 2009 Agreement but did not include an application to extend the default period for the 2008 Agreement. The HSU states that its intention was to apply for the default period of the 2008 Agreement to be extended but inadvertently applied for the 2005 Agreement to be extended instead. It seeks to have the current application amended pursuant to s. 586 of the Fair Work Act 2009 (FW Act) to refer to the 2008 Agreement. Claro opposes the application and seeks to have the application dismissed. This decision deals with the HSU’s amendment application.

Background

1. The Transitional Act was amended by the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth) (SJBP Act) to provide for the termination of all transitional instruments. The SJBP Act refers to agreements of this kind as ‘zombie agreements.’ Pursuant to items 20A(1) and (2) of Schedule 3 to the Transitional Act, zombie agreements were to terminate on 6 December 2023 (the end of the default period) unless extended by the Commission. Where an application to extend the default period is made the agreement subject to the application continues to apply, pursuant to subitem 20A(11), pending the Commission’s decision.

1. Zenitas Healthcare Pty Ltd (Zenitas) is the entity which owns Claro. Zenitas has been involved in a number of merger and acquisition activity since 2016, which included the acquisition of Claro on around 31 May 2018 through the acquisition of all the shares in Australian Home Care Services Pty. Zenitas has also purchased other companies and businesses which had different employment arrangements and brought them together under an operational brand name of Claro Aged Care & Disability Services. This resulted in a range of different terms and conditions under various industrial instruments applying to the employees within the Claro Aged Care & Disability Services business. These instruments included a combination of the Social, Community, Home Care and Disability Services Industry Award 2010 (SCHADS Award), three zombie agreements, and some ‘grandfathered’ terms and conditions from a previously terminated enterprise agreement in South Australia.

1. The three zombie agreements that applied in the merged business were the 2009 Agreement, the 2008 Agreement and the AHC NSW Carers Agreement 2009-2012 (NSW Agreement). No application has been made to extend the NSW Agreement. Claro seeks to standardise the terms and conditions applying to all its employees and seeks the termination of the zombie agreements so that the SCHADS Award becomes the sole instrument covering its employees.

1. The grounds relied upon by the HSU in all of the HSU applications are identical. They are repeated in the applications for the 2009 Agreement and the substantive application in this matter. They are:

1.   The Applicant contends that employees would be better off overall if the Agreement continued to apply to them than if the relevant modern award applied.

2.   The relevant modern award is the Social, Community, Home Care and Disability Services Industry Award 2010 (‘the SCHADS Award’), being the award that covers employers and employees in the social and community services sector.

3.   The Agreement contains several entitlements that are superior to those provided for by the SCHADS Award.

4.   The Applicant submits that the criteria in subitem (9) are met, and further, that it is appropriate to extend the Agreement for the following additional reasons:

a)The Applicant has consulted with members covered by the agreement and the membership have indicated a firm desire to continue to be covered by it.

b)A review of the National Disability Insurance Scheme (NDIS) is currently underway and due to provide a final report in October 2023. The outcome of that review may change the bargaining position of the covered employees. For this reason it is appropriate to extend the coverage of the agreement to allow the parties to consider bargaining after accounting for any changes resulting from that review.

c)The Federal Government are currently considering the recommendation arising from the Disability Royal Commission’s report and are due to provide a response in approximately March 2024. This response may change the bargaining position of the covered employees. For this reason it is appropriate to extend the coverage of the agreement to allow the parties to consider bargaining after accounting for any changes resulting from that review.

5.   The Applicant further submits that it is appropriate to extend the default period until a decision arises from B2023/1235 Application for a supported bargaining authorisation – social, community, home care and disability services sector. The matter is before Deputy President Wright and directions were issued with respect to this matter on 22 November 2023.

The Application – s 586

1. The amendment sought by the HSU is to substitute the reference to the 2005 Agreement in its application to a reference to the 2008 Agreement. The HSU’s application identifying the wrong agreement was made on 24 November 2023. Claro raised its jurisdictional objection on 8 December 2023 pointing out that the HSU had identified the wrong agreement and that the 2005 agreement no longer applied because the 2008 Agreement and 2009 Agreement replaced it. On 15 December 2023 the HSU responded by seeking to have the application corrected pursuant to s 586 of the FW Act to identify the correct agreement.

1. Claro contends that in the circumstances the Commission does not have jurisdiction to entertain the amendment application. In the alternative, Claro contends that the Commission should not exercise its discretion under s. 586 of the FW Act to correct or amend the application. Claro asks instead that we dismiss the application pursuant to ss. 587 (1)(c) and (3)(a).

1. Claro raises two matters going to jurisdiction. The first is that the 2008 Agreement terminated on 6 December 2023 pursuant to item 20A(1) and (2) of Sch 3 to the Transitional Act, which was before the application to amend was made and the Commission cannot substitute the 2008 Agreement for the 2005 Agreement because the 2008 Agreement no longer operates. The second is that the application of 24 November 2023 failed to attach a copy of the 2008 agreement as required by subitem 20A(5) of Sch 3.

1. The HSU explained that the misidentification of the Agreement was inadvertent. It did not intend to apply to extend an agreement that no longer operated. It contends that the amendment is within the Commission’s jurisdiction to make as it will not fundamentally change the nature of the application that was originally made. In that regard it referred to the decision of the Full Bench in Ioannou v Northern Belting Services Pty Ltd[2014] FWCFB 6660 where it was decided that s 586 did not permit the Commission to amend an application where to do so would change the nature of proceedings by, in that case, amending the application from an unfair dismissal application under s 394 to an application to deal with a dispute over dismissal under s 365. The HSU contends that here the amendment is to correctly identify the instrument that is to be extended. The application will continue to proceed, as intended, under Sch 3 of the Transitional Act as an application to extend the default period for an agreement-based industrial instrument.

1. The HSU also referred to the decision of the Full Bench in Djula v Centurion Transport Co [2015] FWCFB 2371 where it was decided that it was within the scope of s. 586 to amend an application to identify the correct employer.

1. We also note the observations of the Full Bench in Lili Sinden v HDR Inc.; HDR Pty Limited[2018] FWCFB 6934 at paragraph [11]:

“Section 586(a) of the FW Act provides that the Commission may “allow a correction or amendment of any application, or other document relating to a matter before the FWC, on any terms that it considers appropriate”. The discretionary power conferred by s 586(a) is self-evidently broad, and encompasses but is not expressed as confined to the correction of mistakes. In respect of the amendment power in a previous iteration of the federal legislative scheme for industrial relations, the High Court treated it as having a wide field of operation so as to give effect to the statutory intention that proceedings should be directed to the merits and that technicalities and legal forms should not be regarded. The same approach is applicable under the FW Act having regard to the requirements in s 577(b) for the Commission to perform its functions and exercise its powers in a manner that is quick, informal and avoids unnecessary technicalities and in s 578(b) for the Commission in performing functions and exercising powers in relation to a matter to take into account equity, good conscience and the merits of the matter. In the context of the Commission’s unfair dismissal jurisdiction, the s 586(a) power has been used to correct the identification of a respondent employer to the extent of substituting one corporate entity for another.”

1. Applying the Full Bench authorities referred to above, we do not agree with Claro’s submissions that we have no jurisdiction to make the amendment sought. We consider s. 586 permits us to amend the application to identify the correct agreement as this will not change the nature of the application made but will ensure the application deals with the correct transitional instrument. We also consider that s. 586 permits us to waive the requirement that the application, if so amended, be accompanied by a copy of the 2008 Agreement. The question then becomes whether we are persuaded to exercise the discretion to do so.

1. As to the second limb of Claro’s argument, that the application is deficient because the HSU did not attach a copy of the 2008 Agreement, we note that the Full Bench in CFMMEU v Griffiths Cranes Pty Ltd [2019] FWCFB 1717 rejected the notion that an application to approve an agreement was invalid because it was not accompanied by a signed copy of the agreement as required by s. 185(2). The Full Bench at [55] considered that the broad discretion provided by s. 586 included a discretion to waive the requirement to file a signed copy of the agreement with the application. We consider this reasoning applied equally to the requirement in subitem 20A (5)(a) of Schedule 3 to the Transitional Act that an application under subitem 20A(4) be accompanied by a copy of the transitional instrument.

1. We find that we do have jurisdiction to make the amendment sought.

1. Claro contends that we should not exercise the discretion to amend the applications for four reasons. First, the 2005 Agreement and the 2008 Agreement have different coverage clauses and the amendment will fundamentally change the substance of the application. Secondly, and relatedly, if the application is amended then the HSU’s ground in support that it has consulted with its members who are covered by the Agreement loses force as it becomes unclear what group of employees was consulted. The third ground is the HSU took no steps prior to 6 December 2023 to have the default period of the 2008 Agreement extended. Claro’s fourth ground is that the HSU did not consult with it about the application before making it. Claro adds that it has invested considerable resources into re-organising its systems to prepare for the shift from the Agreement to the SCHADS Award. This includes changes to payroll systems, workforce management systems, award compliance mechanisms and human resources information systems.

1. Claro does not develop its first ground other than to assert there is a difference in coverage between the two instruments. The 2005 Agreement had a broader coverage than the 2008 Agreement. The amendment will affect fewer of Claro’s employees than had the 2005 Agreement been in operation and the subject of the application. It is apparent that the 2005 Agreement was replaced by two agreements: the 2008 Agreement and the 2009 Agreement. The coverage of the industrial instruments will be an important aspect of the consideration of the substantive application because the HSU contends that the employees covered by the agreement are better off overall if the Agreement continues to apply than if the relevant modern award applied. The different coverage of the 2005 and 2008 Agreements may well have an impact on a consideration of that matter. However, we do not agree with Claro that this matter fundamentally changes the nature of the application. In any event, the discrepancy between the coverage of the 2005 Agreement and the 2008 Agreement is addressed by the HSU’s related application to extend the default period of the 2009 Agreement. The 2009 Agreement together with the 2008 Agreement replaced the 2005 Agreement. If we grant the amendment, all employees covered by the 2005 Agreement will be considered albeit in the two applications. Contrary to Claro’s submission, the amendment will ensure certainty in the assessment of the better off overall criterion which forms one of the bases for the application. It will also ensure equal treatment of the employees who are covered by the two zombie agreements. We do not regard Claro’s first ground to be a reason to refuse the amendment.

1. We also do not find Claro’s second ground persuasive. The question of which employees were consulted by the HSU prior to it making the application is a question that goes ultimately to one aspect of the merits of the application to extend the default period. While that matter may be a relevant factor in exercising the broad discretion to extend the default period, we do not consider that the issue will be a decisive one. We say that because the substantive application is advanced on a number of grounds and a finding that the ‘consultation with members’ ground is not made out by the HSU may not be determinative of the ultimate question of whether we extend the default period.

1. Claro’s third and fourth grounds are related and can be dealt with together. The third is that the HSU took no steps prior to 6 December 2023 to have the default period of the 2008 Agreement extended. The fourth is that the HSU did not consult with Claro before making the application.

1. We were provided with correspondence between the HSU and Claro commencing in June 2023. On around 1 June 2023, the HSU wrote to Claro seeking confirmation that Claro had advised relevant employees that they were covered by zombie agreements that would sunset at the end of 6 December 2023, unless there was an application made to the Commission to extend them. Claro responded that it would do so. It notified employees on 5 June 2023 advising employees that the terms and conditions of their employment would be regulated by the SCHADS Award from 7 December 2023 unless an application was made to extend the operation of the zombie agreements. On 10 July 2023, the HSU wrote to Claro to foreshadow that it may make an application to extend the existing zombie agreements because they contained above-award terms and conditions. The letter sought a response from Claro on whether it had any appetite to make a joint supported bargaining application to the Commission with like disability support providers. In response Claro stated that upon expiry of the relevant zombie agreements, the employment arrangements for relevant employees would be governed by the National Employment Standards and the terms of the SCHADS Award. The next Claro heard from the HSU was on 9 November 2023 when it received a copy of the supported bargaining authorisation application. On 24 November 2023 it was served with copies of the applications to extend the default periods for the 2005 Agreement and the 2009 Agreement.

1. We read the correspondence as the HSU making it clear to Claro that it intended to make applications to extend the default period for the Agreement. These were steps towards making the application. The steps being to let Claro know that it sought to enter into bargaining for replacement arrangements, it wanted to preserve over-award conditions, and it would make application to extend the default periods of the zombie agreements. Those steps also amounted to consultation with Claro. We do not accept that the third and fourth grounds are made out on the evidence.

1. Instead, the evidence tends towards supporting the exercise of the discretion to amend the application as Claro was on notice from the correspondence that applications would be made to extend the zombie agreements. Claro was aware that the 2008 Agreement was a relevant agreement contemplated by the HSU correspondence. When the applications were made the HSU erred by referring to the antecedent 2005 Agreement instead of the 2008 Agreement in its application. We further note that Claro received the application on 24 November 2023 and did not raise the error with the HSU. Instead, it waited until after the end of the statutory default period on 6 December 2023 and then notified the Commission of the error on 8 December 2023 raising the objections that are now necessary to resolve.

1. We note Claro’s submission that it has expended significant resources by way of time and money in reconfiguring its payroll system to implement the changes brought about by the sunsetting of the zombie agreements. Claro intended that from 7 December 2023 all employees then engaged on zombie agreements would come within the purview of the SCHADS Award. It submits that it will now have to incur significant time, expense, and duplicated effort to reconfigure its systems, issue employment agreements to staff and incur costs to purchase additional software to cater for different employment conditions. An estimate was given that the costs would be $400,000 based on costs already incurred and internal costs to resource the anticipated changes. No detail or break up of that figure was provided so we are unable to make any assessment of whether any of those costs will be lost if the application is amended and is successful. If there is a cost associated with a delay in the termination of the zombie agreements, it is a cost that should have been factored in when Claro was told by the HSU in July that it intended to seek an extension of the zombie agreements. We also note that Claro has indicated that its systems are capable of dealing with multiple sets of terms and conditions. We further note that as an application for the 2009 Agreement has been made subitem 20A(11) operates such that that Agreement continues to operate until a decision is made in relation to that agreement. This means Claro’s systems will need to have accommodated the ongoing operation of the 2009 Agreement. We do not consider this a factor that tells against the exercise of the discretion under s586 to amend the application.

1. We have decided to amend the HSU application pursuant to s. 586 of the FW Act. We accept the error arose from inadvertence. Claro is not prejudiced by the amendment as the HSU made clear in July 2023 its intention to make applications to extend the default periods of the zombie agreements that applied to Claro’s workforce. Claro was thereby put on notice that the zombie agreements may not cease operating on 6 December 2023. An application has been made in relation to the 2009 Agreement. If we do not amend the HSU application, then the 2008 Agreement will no longer operate resulting in different treatment of employees who were covered by zombie agreements prior to 6 December 2023. The applications also raise significant grounds that go to the ongoing regulation of the employment for workers in the disability sector. Those employees are generally paid minimum standards only. This application, like the other HSU applications, seeks to protect these employees from the loss of entitlements above the minima. In the circumstances this application should also be heard. We will grant the amendment to allow that to occur. For the same reasons, and so far as it is necessary, we decline Claro’s application to dismiss the applications pursuant to s. 587 of the FW Act.

1. We amend the application made by the HSU such that references to The Disability and Support Services Certified Agreement 2005-2008 in that application are replaced with AHCS Collective Agreement 2008-2011. We also waive the requirement in subitem 20A(5)(a) of Sch 3 of the Transitional Act that the application by accompanied by a copy of the AHCS Collective Agreement 2008-2011.

DEPUTY PRESIDENT

Printed by authority of the Commonwealth Government Printer

<PR774335>