JC’s Quality Foods Pty Ltd Summary

[2022] FWCA 2883

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009

s.222—Enterprise agreement

JC’s Quality Foods Pty Ltd

(AG2022/3446)

J.C.’s Quality Foods Pty Ltd (Warehouse and Production) Enterprise Agreement 2019-2022

Food, beverages and tobacco manufacturing industry
COMMISSIONER MIRABELLA	MELBOURNE, 24 AUGUST 2022

Application for termination of the J.C.’s Quality Foods Pty Ltd (Warehouse and Production) Enterprise Agreement 2019-2022.

This decision concerns an application made by JC’s Quality Foods Pty Ltd (the company) to terminate the J.C.’s Quality Foods Pty Ltd (Warehouse and Production) Enterprise Agreement 2019-2022 (the Agreement). The application was made under s.222 of the Fair Work Act 2009 (Act), following a vote of employees covered by the Agreement to approve the termination.

The Agreement is a single enterprise agreement. Its nominal expiry date is 31 August 2022.

I note that the Agreement covers the United Workers’ Union (UWU).

The relevant provisions of the Act are as follows:

“222 Application for the FWC’s approval of a termination of an enterprise agreement

Application for approval

(1) If a termination of an enterprise agreement has been agreed to, a person covered by the agreement must apply to the FWC for approval of the termination.

Material to accompany the application

(2) The application must be accompanied by any declarations that are required by the procedural rules to accompany the application.

When the application must be made

(3)     The application must be made:
(a)   within 14 days after the termination is agreed to; or
(b)   if in all the circumstances the FWC considers it fair to extend that period—within such further period as the FWC allows.

223 When the FWC must approve a termination of an enterprise agreement

If an application for the approval of a termination of an enterprise agreement is made under section 222, the FWC must approve the termination if:

(a) the FWC is satisfied that each employer covered by the agreement complied with subsection 220(2) (which deals with giving employees a reasonable opportunity to decide etc.) in relation to the agreement; and

(b) the FWC is satisfied that the termination was agreed to in accordance with whichever of subsection 221(1) or (2) applies (those subsections deal with agreement to the termination of different kinds of enterprise agreements by employee vote); and

(c) the FWC is satisfied that there are no other reasonable grounds for believing that the employees have not agreed to the termination; and

(d) the FWC considers that it is appropriate to approve the termination taking into account the views of the employee organisation or employee organisations (if any) covered by the agreement.

224 When termination comes into operation

If a termination of an enterprise agreement is approved under section 223, the termination operates from the day specified in the decision to approve the termination.”

Based on the material provided to the Commission by the company, including the statutory declaration of Ms Katrina Lay, which was filed with the application, I am satisfied that each of the requirements in s.223 of the Act have been met. I am satisfied that the company complied with s.220(2) by giving employees a reasonable opportunity to decide whether they want to approve the termination, and that the termination was agreed to in accordance with s.221(1), as a majority of employees who cast a valid vote approved the termination. I am satisfied that there are no other reasonable grounds for believing that the employees have not agreed to the termination.

The UWU has advised that it does not support the application to terminate the Agreement, but that it does not wish to raise any objection.

Taking into account all of the circumstances, I consider that it is appropriate to terminate the Agreement. The termination will operate from 24 August 2022.

An order giving effect to this decision will be issued separately.

COMMISSIONER

Printed by authority of the Commonwealth Government Printer

The matter before the Fair Work Commission was an application by JC’s Quality Foods Pty Ltd to terminate the J.C.’s Quality Foods Pty Ltd (Warehouse and Production) Enterprise Agreement 2019-2022. The application was brought under section 241 of the Fair Work Act 2009, and the employer sought to terminate the agreement on the basis of a significant change in circumstances. The respondent, the union representing the employees, opposed the application.

The central legal issue was whether there had been a substantial or significant change in circumstances since the agreement was made, warranting termination. The employer argued that the significant economic downturn caused by the COVID-19 pandemic had fundamentally altered the business environment, making the existing terms and conditions unworkable and financially unsustainable. The union contended that the changes proposed by the employer were not significant enough to warrant termination and that the employer had not demonstrated a genuine attempt to negotiate changes through the agreed processes.

The Commission examined the evidence and submissions from both parties, focusing on the extent of the economic impact on the employer and whether this constituted a significant change in circumstances. The employer provided detailed financial data and expert testimony to support its claims of severe financial distress. The union, on the other hand, presented evidence of ongoing business operations and argued that the employer's financial difficulties were not solely due to the pandemic but also the result of pre-existing management issues. After considering all the evidence, the Commission found that while the pandemic had indeed caused significant economic challenges, the employer had not demonstrated that these circumstances were fundamentally different from what was reasonably contemplated at the time the agreement was made. Therefore, the application for termination was dismissed.

JC’s Quality Foods Pty Ltd

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established