JaJoTa Pty Ltd

[2020] FWCA 4392

[2020] FWCA 4392

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.225 - Application for termination of an enterprise agreement after its nominal expiry date

JaJoTa Pty Ltd
(AG2019/3116)

SEC-CON PTY LTD AND CEPU ELECTRICAL DIVISION QUEENSLAND ENTERPRISE AGREEMENT 2015 - 2018

Electrical contracting industry
COMMISSIONER HUNT	BRISBANE, 20 AUGUST 2020

Application for termination of the SEC-CON Pty Ltd and CEPU Electrical Division Queensland Enterprise Agreement 2015 – 2018 – early confusion regarding competent employer to make application – transfer of business and transferable instrument – no employees – agreement to bargain – application approved.

[1] On 22 August 2019, an application pursuant to s.255 of the Fair Work Act 2009 (the Act) was made to the Fair Work Commission (the Commission) to terminate the SEC-CON Pty Ltd and CEPU Electrical Division Queensland Enterprise Agreement 2015 – 2018 (the Agreement). The Agreement was approved on 10 October 2017, with a nominal expiry date of 31 December 2018.

[2] The application was made by SEC-CON Pty Ltd, ABN 55 673 368 219, by Mr Leonard Werba, Director. The contact person was nominated as Ms Jasmine Werba. The capacity in which the application was made was as “an employer covered by the Agreement”.

[3] The application form stated that there are no employee organisations covered by the Agreement. In fact, the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (the CEPU) is an employee organisation covered by the Agreement.

[4] Forming part of the application was a Form F24C – Statutory Declaration in relation to termination of an enterprise agreement after the nominal expiry date (Form F24C). Correspondence was sent from the Commission on 22 August 2019, advising the Form F24C filed was incomplete as it had not been signed, dated or witnessed by an authorised witness.

[5] On 5 September 2019, a further Form F24C sworn by Mr Leonard Werba was filed. The Form F24C declared Mr Werba as the Director of SEC-CON Pty Ltd, and stated that it was no longer performing work on the worksites covered by the Agreement and confirmed that employees were covered by the Agreement. The matter was allocated to my Chambers on 6 September 2019.

[6] The further Form F24C named the Applicant as SEC-CON Pty Ltd with an ACN of 104 204 280, and an ABN of 55 673 368 219.

[7] On 11 September 2019, my Associate wrote to the CEPU, copying in what was understood to be an email address of SEC-CON Pty Ltd, to seek the CEPU’s views regarding the application to terminate the Agreement. The CEPU sent correspondence to my Chambers on 19 September 2019, indicating that it opposed the termination of the Agreement and sought to be heard in relation to the matter.

[8] On 24 September 2019, the CEPU made an application pursuant to s.236 of the Act for an order for a majority support determination. Although the CEPU withdrew this application on 19 December 2019, up until the withdrawal of that application I considered it was appropriate to deal with the two applications together.

[9] On 25 September 2019, directions were issued requiring SEC-CON Pty Ltd to confirm how many employees were covered by the Agreement and to advise the terms and conditions of employment that would apply to those employees if the Agreement was terminated. In the same correspondence, directions were also issued regarding the CEPU’s application made under s.236 of the Act.

[10] On 27 September 2019, I received correspondence to my Chambers that stated as follows:

“There are the three employees contracts, that each employee has agreed and signed their new terms and conditions for employment”.

[original text]

[11] Attached to the correspondence was three separate employee contracts.

[12] My Chambers sent correspondence to the parties on 30 September 2019, noting that SEC-CON Pty Ltd had failed to comply with the directions. SEC-CON Pty Ltd was directed to confirm how many employees are covered by the Agreement by close of business that day. In the same correspondence, it was noted that SEC-CON Pty Ltd had failed to confirm whether it opposed the application made under s.236 of the Act. If it was opposed, directions were issued requiring submissions setting out its reasons for opposing the application by 12:00pm, 2 October 2019.

[13] Correspondence was received on 30 September 2019 stating that “there are only 3 employees that will be effected and they were the attachments I sent through on Friday with each employees new terms and conditions” [original text].

[14] On 2 October 2019, my chambers received correspondence from Ms Hannah O’Shea, Administration Officer, purportedly of SEC-CON Pty Ltd, advising that the CEPU’s s.236 application was opposed. An extension of time to provide submissions was requested. I granted a short extension of time until 10:00am on 8 October 2019, however noted that any further requests for extensions of time must be made in writing and must be made a reasonable amount of time before the material is due for filing.

[15] The CEPU requested both matters be listed for a directions hearing to discuss the progression of the matters. After considering the views of the parties, I determined to list the matter for a conference in-person at the Commission on 9 October 2019. The conference was relisted for 10 October 2019 due to Mr Werba’s availability.

Conference of 10 October 2019

[16] Discussions at the conference of 10 October 2019 were to the point that SEC-CON Pty Ltd, the employer covered by the Agreement did not “appear to exist.” The ABN attributed to SEC-CON Pty Ltd within the Agreement is the ABN for “The Trustee for SEC-CON TRUST”; a different entity which is not described in the Agreement.

[17] Mr Werba stated that the small number of employees would be transferred from “The Trustee for SEC-CON TRUST” to the proposed new employer, “JaJoTa Pty Ltd”. I discussed with the parties the difficulty of the Agreement appearing to have been incompetently made.

[18] Following the conference directions were issued to the parties on 15 October 2019, requiring Mr Werba to file an outline of submissions in support of the application to terminate the Agreement and an outline of submissions in relation to the CEPU’s s.236 application by 25 October 2019. The CEPU was required to file an outline of submissions opposing the employer’s application to terminate the Agreement and an outline of submissions in support of its s.236 application by 6 November 2019. The matter was listed for hearing on 25 November 2019.

[19] Mr Werba failed to provide submissions as per the directions. I granted an extension to both Mr Werba and the CEPU to file material.

Submissions of Mr Werba

[20] On 1 November 2019, Mr Werba filed submissions on behalf of JaJoTa Pty Ltd, nominated by him as the Applicant. I understand that to be effectively a request for leave to have JaJoTa Pty Ltd substituted as the Applicant in these proceedings.

[21] The submissions may be summarised as follows:

(a) At the time the Agreement was created, economic conditions were positive;
(b) The rates of pay under the Agreement are 90 – 138% more than the Electrical, Electronic and Communications Contract Award 2010 (the Award);
(c) Other entitlements far exceed Award conditions;
(d) Projects have substantially reduced and the wages costs under the Agreement have priced the business out of being able to obtain work to maintain current employment levels;
(e) Termination of the Agreement would not be contrary to the public interest, and more employees would be able to be employed. Current employees would continue to receive their over-award rate of pay;
(f) The Agreement was made in the name of SEC-CON Pty Ltd, rather than Sec-Con Trust, and given SEC-CON Pty Ltd does not exist, the Agreement would be considered null and void;
(g) The employees have been consulted and support termination of the Agreement;
(h) There will be no significant adverse effects on employees if the Agreement is terminated.

Submissions and evidence of the CEPU

Mr Christopher Lynch

[22] Mr Lynch provided a signed witness statement in these proceedings. He is an Officer of the CEPU. His evidence is that in June or July 2017 he negotiated an enterprise agreement with Mr Werba. The agreement was based on a template agreement in the electrical contracting industry.

[23] At the time, Mr Werba’s emails included SEC-CON Pty Ltd with an ABN of 55 673 368 219. In preparing the necessary paperwork for approval of the Agreement, Mr Lynch emailed Ms Kathryn Bignell, CEPU’s administration officer, informing her that the employer is SEC-CON Pty Ltd. Mr Lynch now states that he should have checked this information prior to the preparation of the paperwork.

[24] The CEPU prepared the Form F16 and Form F17 and sent it to Mr Werba for him to execute. It was then returned to the CEPU where the CEPU also completed a Form F18 nominating the employer as SEC-CON Pty Ltd and seeking to be covered by the Agreement.

[25] Mr Lynch stated that the last pay increase within the Agreement was on 1 July 2018. The CEPU communicated with Mr Werba in late 2018, and on 4 December 2018 Mr Werba replied on SEC-CON Pty Ltd letterhead that he wished to negotiate but did not wish to have automatic pay increases.

[26] In mid-September 2019, one of Mr Werba’s employees contacted Mr Lynch to advise that Mr Werba had proposed employment of that employee be transferred to JaJoTa Pty Ltd. The contract provided to employees includes a reference to SEC-CON Pty Ltd in the top right corner but stated that the employer is Leonard Werba ATF Sec-Con Trust trading as Sec-Con Trust with an ABN of 55 673 368 219.

[27] The rate of pay for one employee in the proposed contract is $43 per hour, as opposed to his rate under the Agreement of $46.70. A copy of a pay slip provided to the Commission demonstrates it was made by SEC-CON Pty Ltd with the above ABN of 55 673 368 219. It is Mr Lynch’s understanding that employees are now employed by JaJoTa Pty Ltd.

[28] Mr Lynch caused the CEPU to undertake further inquiries relevant to the entities involved in these proceedings. His evidence is that SEC-CON Pty Ltd did have an ACN of 104 240 280, however that company was deregistered in August 2006, apparently at the initiative of ASIC. The historical extract provided to the Commission demonstrates that it was a company incorporated in Victoria, and Mr Werba appears not to have had any association with the entity. The entity was originally established in 2003 as Freakout Security Services Pty Ltd, changing its name to Freak Out Security Services Pty Ltd, to eventually SEC-CON Pty Ltd.

[29] An ABN Lookup attached to Mr Lynch’s statement details the entity, The Trustee for SEC-CON Trust, with ABN of 55 673 368 219 has held an active ABN status since 18 September 2008. It has been GST registered from 1 April 2011.

Submissions

[30] The CEPU submitted that the applicant, SEC-CON Pty Ltd is not competent to make the application because it is neither the employer of employees covered by the Agreement, nor is Mr Werba a director of SEC-CON Pty Ltd and he has not had any affiliation with the entity, deregistered since 2006.

[31] Other submissions were made relevant to the public interest test and whether it is appropriate to terminate the Agreement.

Hearing

[32] The matter was listed for hearing on 25 November 2019. During the hearing Mr Werba stated that he would be prepared to issue to employees, now employed by JaJoTa Pty Ltd, a completed Notice of Employee Representation Rights (NERR) to negotiate a new agreement. Further, he committed to filing a witness statement as to the corporate structure of the employer and its associated entities within the last 10 years, specifically confirming which entity employed the relevant employees at the time the Agreement was made.

[33] On 27 November 2019 Mr Werba confirmed the NERR had been sent to all employees of JaJoTa Pty Ltd. On 12 December 2019 Mr Werba sent a copy of a Discretionary Family Trust Deed for the Sec-Con Trust. It purports to nominate Sec-Con Pty Ltd with ACN 133 307 945 as the Trustee. Mr Werba included the following correspondence:

“Please find the attached corporate structure for Sec-Con Trust/Sec-Con Pty Ltd.

Note as this business is in liquidation since August this year we have no records and have no control over accounts and our accountant is no longer available or associated with the business. To contact the liquidator is the best option now.

I hope this document attached clarifies what is required as it is stated the structure.”

[34] On 12 February 2020, my chambers sent correspondence to the parties listing the matter for hearing on 11 March 2020. The parties were invited to file further material by 4 March 2020. The hearing was adjourned until 2 April 2020.

[35] On 31 March 2020, Mr Werba on behalf of JaJoTa Pty Ltd trading as Sec-Con with an ABN of 41 159 203 899 invited the Commission to determine the application on the papers. He noted that no employees were employed.

[36] On 1 April 2020, Ms Pat Rogers, Industrial Officer of the CEPU corresponded as follows:

“We would note that the issue of the legal identity of the employer that signed the agreement has never been resolved.  We would also note that the capacity or otherwise of JaJoTa Pty Ltd to apply to terminate the agreement, when they are not a party to the agreement, remains outstanding and unresolved, despite repeated requests from the Commission for information that would allow them to determine a way forward in relation to the application.

However, given the circumstances, specifically that there are no longer any members of the Union employed by the employer, the Union leaves the determination of the matter to the Commission.”

[37] I determined to hear the matter on the papers and vacated the hearing.

Further material filed July 2020

[38] On 22 July 2020 the following correspondence was sent to the parties:

“….A review of ASIC’s registration database reveals the following company extract for SEC-CON Pty Ltd, which later became CFKASC Pty Ltd.   See attached.

The Commissioner’s preliminary understanding/view is as follows:

(a) 18 September 2008 SEC-CON Pty Ltd was registered with ACN 133 307 945.  It is not clear how it was able to be registered in light of an earlier registration of the same name, but a different ACN of 104 240 280 ;

(b) On the same date the discretionary family trust was created by SEC-CON Pty Ltd;

(c) Employees were purportedly employed by SEC-CON Pty Ltd as evidenced by pay slips, however the incorrect ABN was nominated – the trust ABN of 55 673 368 219 was provided on the pay slips instead of the ABN of SEC-CON Pty Ltd;

(d) The enterprise agreement was made by SEC-CON Pty Ltd, however when completing the Form F16 and Form F17, the incorrect ABN was nominated;

(e) The enterprise agreement was approved with SEC-CON Pty Ltd as the employer party;

(f) The application to terminate the Agreement was made by SEC-CON Pty Ltd in August 2019, however the incorrect ABN was provided with the application;

(g) On 30 August 2019, SEC-CON Pty Ltd changed its name to CFKASC Pty Ltd;

(h) On 26 September 2019 an application was made to wind CFKASC Pty Ltd up.

On 29 August 2019 employees executed a contract to agree to be employed by Leonard Werba ATF Sec-Con Trust trading as Sec-Con Trust.   Disappointingly, the top right corner of the front page of the contract referred to SEC-CON Pty Ltd and provided the ABN of the Trust.

At some point, perhaps in November 2019, employees became employed by JaJoTa Pty Ltd ABN 41 159 203 899.

The Commissioner directs Mr Werba to provide a witness statement detailing:

(i) Which entity employed relevant employees in June 2017 and July 2017.  Evidence such as pay slips, payment summaries (for example, payment summaries from July 2017 for the 2016/2017 financial year), bank records detailing from which bank account payment to employees was made from, and taxation returns (with non-relevant material redacted);

(ii) Why SEC-CON Pty Ltd changed its name to CFKASC Pty Ltd in late August 2019?;

(iii) Was there a transfer of business pursuant to s.311 of the Act between SEC-CON Pty Ltd (which later became CFKASC Pty Ltd) to Leonard Werba ATF Sec-Con Trust trading as Sec-Con Trust [in late August 2019], and then a further transfer of business to JaJoTa Pty Ltd?   The evidence will need to detail if this is the case.  Sections 311- 315 of the Act are provided for reference.   

In the event the Commissioner is satisfied there was a transfer of business from SEC-CON Pty Ltd to the Trust, and then to JaJoTa Pty Ltd, it would seem likely that the Agreement became a transferrable instrument and it presently covers employees of JaJoTa Pty Ltd.

If there has been a transfer of business, the Commissioner considers that she could amend the s.225 application to have been made by JaJoTa Pty Ltd.

Mr Werba’s witness statement, and any submissions he wishes to make are required to be filed to chambers and served on the CEPU by no later than 4:00pm Tuesday, 28 July 2020.

Following receipt of Mr Werba’s statement and submissions, the CEPU is directed to make any further statement or submissions and file to chambers and serve on Mr Werba by no later than 4:00pm Friday, 31 July 2020.”

[39] In complying with the directions, Mr Werba filed a further statement. His evidence may be summarised as follows:

(a) SEC-CON Pty Ltd was incorporated on 19 September 2008 with an ACN of 133 307 945. The earlier business of the same incorporated name but of a different ACN was deregistered by ASIC on 20 August 2006;
(b) The corporate structure of the employer of employees was SEC-CON Pty Ltd ACN 133 307 945 as Trustee of the SEC-CON Trust ABN 55 673 368 219;
(c) SEC-CON Pty Ltd did not trade on its own behalf and only acted as trustee and had no ABN for trading on its own behalf;
(d) The correct ABN appeared on the payslips; ABN 55 673 368 219;
(e) The same concept applied to the application for approval of the enterprise agreement. The correct employing entity was SEC-CON Pty Ltd ACN 133 307 945 as Trustee for the SEC-CON Trust ABN 55 673 368 219;
(f) For clarity the Agreement should have noted the employer as SEC-CON Pty Ltd ACN 133 307 945 as Trustee of the SEC-CON Trust ABN 55 673 368 219;
(g) All dealings with the Australian Taxation Office (ATO) for employees, including but not limited to remittance of PAYG instalments, payment of superannuation contributions and the issue of payment summaries was carried out by SEC-CON Pty Ltd ACN 133 307 945 as Trustee of the SEC-CON Trust ABN 55 673 368 219;
(h) On 30 August 2019 SEC-CON Pty Ltd changed its name to CFKASC Pty Ltd on the advice of pre-insolvency consultants, DeJonge Reid;
(i) CFKASC Pty Ltd was wound up on 1 November 2019;
(j) On 29 August 2019 employees executed a contract to agree to be employed by Leonard Werba ATF SEC-Con Trust trading as SEC-CON Trust. The top right corner of the front page of the contract referred to SEC-CON Pty Ltd and provided the ABN of the Trust;
(k) The contract in (j) was prepared by Employsure and was in accordance with its advice;
(l) Mr Werba does not know why the contract named himself as Trustee of the SEC-CON Trust because at that time the trustee of the SEC-CON Trust was ABN 55 673 368 219;
(m) Mr Werba was never the employer and never the Trustee of the SEC-CON Trust;
(n) JaJoTa Pty Ltd ACN 159 203 899 purchased plant and equipment of CFKASC Pty Ltd and offered the employees of CFKASC Pty Ltd employment on similar terms. It was an asset purchase;
(o) JaJoTa Pty Ltd no longer employs any employee who would be bound by the terms of the Agreement.

[40] Mr Werba undertook and did read s.311 of the Act, relevant to transfer of business. He submitted that there had been a transfer of business.

[41] On 30 July 2020 the CEPU provided its views as follows:

“The Union has received a copy of the information provided to the Commission by Mr Len Werba.  It is my view that Mr Werba’s response does not adequately address the concerns raised by the Commission.

However, I note that that the Union had previously indicated that, as we no longer had members employed by the employer, the Union sought to leave the determination of the matter to the Commission.  I can confirm that this continues to be the Union’s position.”

Legislation – termination of an enterprise agreement

[42] Section 225 of the Act provides:

“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.”

[43] Section 226 of the Act provides:

“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.”

Legislation – transfer of business

[44] With respect to a transfer of business, Section 311 of the Act provides:

“When does a transfer of business occur

Meanings of transfer of business , old employer , new employer and transferring work

(1) There is a transfer of business from an employer (the old employer ) to another employer (the new employer ) if the following requirements are satisfied:

(a) the employment of an employee of the old employer has terminated;

(b) within 3 months after the termination, the employee becomes employed by the new employer;

(c) the work (the transferring work ) the employee performs for the new employer is the same, or substantially the same, as the work the employee performed for the old employer;

(d) there is a connection between the old employer and the new employer as described in any of subsections (3) to (6).

Meaning of transferring employee

(2) An employee in relation to whom the requirements in paragraphs (1)(a), (b) and (c) are satisfied is a transferring employee in relation to the transfer of business.

Transfer of assets from old employer to new employer

(3) There is a connection between the old employer and the new employer if, in accordance with an arrangement between:

(a) the old employer or an associated entity of the old employer; and

(b) the new employer or an associated entity of the new employer;

the new employer, or the associated entity of the new employer, owns or has the beneficial use of some or all of the assets (whether tangible or intangible):

(c) that the old employer, or the associated entity of the old employer, owned or had the beneficial use of; and

(d) that relate to, or are used in connection with, the transferring work.

Old employer outsources work to new employer

(4) There is a connection between the old employer and the new employer if the transferring work is performed by one or more transferring employees, as employees of the new employer, because the old employer, or an associated entity of the old employer, has outsourced the transferring work to the new employer or an associated entity of the new employer.

New employer ceases to outsource work to old employer

(5) There is a connection between the old employer and the new employer if:

(a) the transferring work had been performed by one or more transferring employees, as employees of the old employer, because the new employer, or an associated entity of the new employer, had outsourced the transferring work to the old employer or an associated entity of the old employer; and

(b) the transferring work is performed by those transferring employees, as employees of the new employer, because the new employer, or the associated entity of the new employer, has ceased to outsource the work to the old employer or the associated entity of the old employer.

New employer is associated entity of old employer

(6) There is a connection between the old employer and the new employer if the new employer is an associated entity of the old employer when the transferring employee becomes employed by the new employer.”

Consideration

Section 225 - validity of the application

[45] The Agreement is expressed to cover SEC-CON Pty Ltd and its employees in the job classifications set out in the Agreement. Pursuant to s.225 of the Act, only an employer covered by the Agreement, or an employee covered by the Agreement, or an employee organisation covered by the Agreement may apply to have the Agreement terminated.

[46] Early on in the proceedings it appeared that the Agreement may not have ever been validly made, as there was no explanation as to why the Agreement was made by SEC-CON Pty Ltd when it appeared to have been deregistered in 2006. It certainly appeared prima facie that there had been a substantial error in the name of the applicant to the Agreement, and therefore it was troubling how the application to terminate the Agreement could be validly made.

[47] Mr Werba was not, at that time, able to offer suitable assistance to the Commission relevant to the corporate structure of the Applicant relevant to its various entities and incarnations. There was no clarity provided by Mr Werba as to the creation of SEC-CON Pty Ltd in 2008 being completely unrelated to the entity of the same name, deregistered by ASIC in 2006.

[48] It wasn’t until the Commission drew to Mr Werba’s attention to name change of SEC-CON Pty Ltd to CFKASC Pty Ltd in late 2019 that the matter could properly progress to the stage where Mr Werba’s evidence at [39] was useful.

[49] I am satisfied that the application to have the Agreement approved identified the correct employer of the employees covered by the Agreement, even if it did not contain the full name of the employer, namely the trust.

[50] Accordingly, I am satisfied that at the time of making this application, SEC-CON Pty Ltd was the employer of employees covered by the Agreement and the application was validly made pursuant to s.225(a) of the Act.

[51] It is noted that the corporation then became CFKASC Pty Ltd on 30 August 2019, and employees were offered employment on 29 August 2019 by another entity; in reality they were offered and accepted employment with JaJoTa Pty Ltd.

[52] I am satisfied that there was a transfer of business between SEC-CON Pty Ltd and JaJoTa Pty Ltd on 29 August 2019. I am satisfied that this is so not only because the organisations are clearly associated entities pursuant to s.311(6), but at least one other test at s.311(3) is satisfied to meet the requirements of s.311(1).

[53] I am satisfied that the Agreement is a transferable instrument pursuant to s.313 of the Act and it applies to JaJoTa Pty Ltd. To the best of my knowledge JaJoTa Pty Ltd has not treated the Agreement as applying to it, and it undertakes that course of action at its peril. It may be that it has an exposure to underpayment of the Agreement from 29 August 2019 while ever it had relevant employees employed.

[54] If there had not been a transfer of business and the Agreement was not a transferable instrument, the application could not be competently made or pursued without leave of the Court as CFKASC Pty Ltd was voluntarily wound up. Section 500(2) of the Corporations Act 2001 (the Corporations Act)provides:

“After the passing of the resolution for voluntary winding up, no action or other civil proceeding is to be proceeded with or commenced against the company except by leave of the Court and subject to such terms as the Court imposes.”

[55] Section 58AA of the Corporations Act provides the following definition in relation to the meaning of ‘court’ and ‘Court’:

“58AA Meaning of court and Court

(1) Subject to subsection (2), in this Act:

“court” means any court.

“Court” means any of the following courts:

(a) the Federal Court;

(b) the Supreme Court of a State or Territory;

(c) the Family Court of Australia;

(d) a court to which section 41 of the Family Law Act 1975 applies because of a Proclamation made under subsection 41(2) of that Act.

(2) Except where there is a clear expression of a contrary intention (for example, by use of the expression ‘the Court’), proceedings in relation to a matter under this Act may, subject to Part 9.7, be brought in any court.

Note: The matters dealt with in Part 9.7 include the applicability of limits on the jurisdictional competence of courts.”

[56] In Smith & Ors v Trollop Silverwood & Beck Pty Ltd,¹ the Full Bench held that the Commission is not a ‘Court’ and is therefore unable to grant leave as prescribed in s.500(2) of the Corporations Act.

[57] I am, however, satisfied that the application has been validly made by SEC-CON Pty Ltd, and the transfer of business to JaJoTa Pty Ltd allows it to continue to press the application. I have decided to exercise my discretion pursuant to s.586 of the Act to amend the application, substituting JaJoTa Pty Ltd as the applicant in the proceedings.

Section 226(a) – FWC must be satisfied that the application is not contrary to the public interest

[58] The Full Bench of the Australian Industrial Relation Commission, as the Commission was known then, considered the meaning of the public interest in Kellogg Brown & Root Pty Ltd and Others v Esso Australia Pty Ltd: 2

“[23] The notion of public interest refers to matters that might affect the public as a whole such as the achievement or otherwise of the various objects of the Act, employment levels, inflation, and the maintenance of proper industrial standards. An example of something in the last category may be a case in which there was no applicable award and the termination of the agreement would lead to an absence of award coverage for the employees. While the content of the notion of public interest cannot be precisely defined. it is distinct in nature from the interests of the parties. And although the public interest and the interests of the parties may be simultaneously affected, that fact does not lessen the distinction between them.”

[59] It was put by Mr Werba on behalf of SEC-CON Pty Ltd, but I take it to then be by JaJoTa Pty Ltd as the employer later covered by the Agreement that terminating the Agreement is not contrary to the public interest on multiple grounds. Firstly, the employer submitted that the absence of the Agreement will allow the employer to maintain the current employment levels, as it will no longer be required to engage in the redundancy process provided under the Agreement. Secondly, the employer will be in a better position to increase employment opportunities within the region by being able to hire more employees if the Agreement was terminated. Thirdly, the employer submitted that the employees will continue to be regulated through the fair industrial standards that are maintained through the operation of the relevant modern award.

[60] The CEPU submitted that for the Agreement to be terminated in the circumstances of the present matter would be clearly contrary to the public interest. In advancing its argument, the CEPU submitted the employer ignored its obligations under the Act and the Agreement as follows:

•  The Employer provided inaccurate information in relation to the name of the organisation in the initial paperwork and Fair Work Commission Forms for the approval of the Agreement;

•  The entity named on the application to terminate the Agreement does not have standing to make the application;

•  The employer has provided inaccurate or no information in its application to terminate the Agreement and accompanying Form F24C, including that the Agreement covers four employees and no employee organisations and has failed to answer question 2.3 in the Form F24C in relation to the effect of the Agreement on employees;

•  The employer failed to advise the CEPU that it intended to apply to terminate the Agreement, and failed to provide a copy of the s.225 application to the employees and the CEPU; and

•  The employer has introduced new employment contracts for the employees covered by the Agreement and has commenced paying the employees terms and conditions that are lesser than those provided in the Agreement.

[61] It is my view that the Agreement has applied to JaJoTa Pty Ltd since around 29 August 2019. Again, if it has failed to apply the Agreement to its employees it is at its peril. Any enforcement of the Agreement to relevant employees would be necessary in a court of competent jurisdiction.

[62] Mr Werba’s statement at [39(o)] declares that JaJoTa Pty Ltd no longer employs any employees who would be bound by the terms of the Agreement. I take that to mean that no employees would be covered by the Agreement. This evidence is uncontested and accepted.

[63] There being no employees employed who would be covered by the Agreement at this point in time, I am satisfied that the application to terminate the Agreement is not contrary to the public interest. In coming to this conclusion, I have also had regard to the NERR that has been distributed by JaJoTa Pty Ltd to its employees that it had at the time, in late 2019. If future employees are employed by JaJoTa Pty Ltd, arguably bargaining would be required to be resumed.

Section 226(b) – FWC must be satisfied that it is appropriate to terminate the Agreement

[64] The applicant submitted that the employees who were, at the time covered by the Agreement expressed a written statement that transitioning to the relevant modern award still provides them with reasonable terms and conditions of employment and have confirmed their support to terminate the Agreement. Hand-written statements of relevant employees employed at the time were provided to the Commission on 1 November 2019.

[65] The applicant further submitted that terminating the Agreement would allow the applicant to “maintain its current workforce, create more competition within the Area by being able to offer more competitive quotes, and generate more employment opportunities within the region”. 3

[66] Since the filing of that material, the applicant has declared, and I accept the uncontested evidence that there are no employees employed by JaJoTa Pty Ltd who would be covered by the Agreement.

[67] The CEPU submitted that the Commission cannot be satisfied that it is appropriate to terminate the agreement. The CEPU submitted that it has, on several occasions, approached the applicant in an effort to negotiate a replacement agreement and has attempted to negotiate employees’ wages and conditions with the employer. However, the applicant has not responded to these approaches.

[68] The CEPU said that the effect of terminating the Agreement would allow the employer to reduce the terms and conditions of employment, without any attempt on its part to negotiate.

[69] Having regard to the NERR issued by JaJoTa Pty Ltd, bargaining would again be on foot in the event relevant employees are employed by JaJoTa Pty Ltd. The NERR was issued by JaJoTa Pty Ltd in the face of an application by the CEPU for a majority support determination, later withdrawn.

[70] The circumstances of any future employees to be employed by JaJoTa Pty Ltd, if the Agreement is terminated is that their terms and conditions will be covered by the relevant modern award. By virtue of the NERR that has been issued, they may bargain with their employer for an enterprise agreement to improve upon the award conditions.

[71] The circumstances of the CEPU in the event the Agreement is terminated is that it may bargain on behalf of its members with JaJoTa Pty Ltd to improve upon the award conditions.

[72] I consider it appropriate to terminate the Agreement taking into account all the circumstances including the views of the employer and the CEPU, noting that there are presently no employees’ views to take into consideration, and the circumstances of future employees, the employer and the CEPU including the likely effect that the termination will have on each of them.

Conclusion

[73] Based on the material before the Commission, in consideration of s.226(a), I am satisfied that the termination of the Agreement is not contrary to the public interest. There is nothing before me which raises public interest considerations which might militate against the termination of the Agreement.

[74] I accept the evidence before the Commission that there are no employees covered by the Agreement.

[75] In consideration of the material before me relevant to s.226(b)(i) and (ii), I consider that it is appropriate to terminate the Agreement.

[76] In accordance with s.226, I must terminate the Agreement. The application to terminate the Agreement is approved.

[77] The termination will take effect from today, 20 August 2020.

COMMISSIONER

1 (2003) 142 IR 137.

 2   PR355357 [2005] AIRC 72.

 3 Employer’s Submissions, filed 1 November 2019, at Paragraph [21].

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