Kidman Park Community Child Care Centre Inc

Case •

[2024] FWCA 1660

•

8 MAY 2024
[2024] FWCA 1660

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009

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

Kidman Park Community Child Care Centre Inc

(AG2024/1294)

KIDMAN PARK COMMUNITY CHILD CARE CENTRE ENTERPRISE AGREEMENT 2016

Children's services

DEPUTY PRESIDENT HAMPTON

ADELAIDE, 8 MAY 2024

Application for termination of the Kidman Park Community Child Care Centre Enterprise Agreement 2016

  1. This decision concerns an application made on 18 April 2024 by Kidman Park Community Child Care Centre Inc (Applicant) pursuant to s.225 of the Fair Work Act 2009 (Act) to terminate the Kidman Park Community Child Care Centre Enterprise Agreement 2016 (Agreement).

  1. The matter was heard by the Commission via MS Teams video hearing convened on 7 May 2024. Ms Ryan, the Centre’s Director, appeared on behalf of the Applicant. The United Workers’ Union (UWU) is covered by the Agreement and was provided with the application and the notice of listing for the hearing.

  1. The Agreement was approved by the Commission on 11 January 2017 with a nominal expiry date of 30 June 2019. Accordingly, it is now over 7 years since the Agreement was made and approved and almost 5 years passed since its nominal expiry date. I observe that in the intervening period there have been some significant changes to the Children’s Services Award 2010 (Award), that covers the parties but does not apply to them given the existence of the Agreement.

  1. Sections 219 to 222 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     Terminating an enterprise agreement after its nominal expiry date

(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)if the agreement contains terms providing entitlements relating 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.

(2)       This subsection covers a termination of the employment of an employee:

(a)at the employer’s initiative because the employer no longer requires the job done by the employee to be done by anyone, except where this is due to the ordinary and customary turnover of labour; or

(b)       because of the insolvency or bankruptcy of the employer.

(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).

Note:The President may be required to direct a Full Bench to perform a function or exercise a power in relation to the matter if any of the employers, employees, or employee organisations, covered by the agreement oppose the termination (see subsection 615A(3)).

(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.

226A   Guarantee of termination entitlements

Guarantee of termination entitlements

(1)A guarantee of termination entitlements is an undertaking given by an employer covered by an enterprise agreement that:

(a)is an undertaking that the employer will comply with subsection (3) if the agreement is terminated under section 226 and the employer terminates the employment of a protected employee for the termination of the agreement:

(i)at the employer’s initiative because the employer no longer requires the job done by the employee to be done by anyone, except where this is due to the ordinary and customary turnover of labour; or

(ii)     because of the insolvency or bankruptcy of the employer; and

(b)     is in writing; and

(c)meets any requirements relating to the signing of undertakings that are prescribed by the regulations.

(2)A protected employee for a termination of an enterprise agreement under section 226 is an employee who would, but for the termination of the agreement, be covered by the agreement.

(3)For the purposes of paragraph (1)(a), the employer complies with this subsection, in relation to the termination of the protected employee’s employment, if the employer complies with the terms of the enterprise agreement that, if the agreement were still in operation, would have provided the employee with entitlements that:

(a)       relate to a termination of the employee’s employment:

(i)at the employer’s initiative because the employer no longer requires the job done by the employee to be done by anyone, except where this is due to the ordinary and customary turnover of labour; or

(ii)because of the insolvency or bankruptcy of the employer; and

(b)except if the employee was an award/agreement free employee immediately before the termination of the employee’s employment—are more beneficial than the entitlements under a modern award that covered the employee in relation to the employment at that time.

When guarantee is in force

(4)A guarantee of termination entitlements given in relation to the termination of an enterprise agreement:

(a)comes into force on the day on which the termination of the agreement comes into operation under section 227; and

(b)ceases to be in force at the earliest of the following times:

(i)if the guarantee specifies a period during which the guarantee is to remain in force and the FWC approves that period under subsection (5)—the end of that period;

(ii)immediately before another enterprise agreement that covers the same, or substantially the same, group of employees as the terminated agreement comes into force;

(iii)the end of the period of 4 years beginning on the day the guarantee is given to the FWC.

(5)The FWC may, in its decision terminating an enterprise agreement, approve a period for the purposes of subparagraph (4)(b)(i) if it considers the period to be appropriate.

Employer must comply with guarantee

(6)An employer must comply with a guarantee of termination entitlements given by the employer to the FWC in relation to the termination of an enterprise agreement if:

(a)     the agreement is terminated under section 226; and

(b)the employer terminates the employment of a protected employee for the termination of the agreement while the guarantee is in force:

(i)    at the employer’s initiative because the employer no longer requires the job done by the employee to be done by anyone, except where this is due to the ordinary and customary turnover of labour; or

(ii)   because of the insolvency or bankruptcy of the employer.

Note:This subsection is a civil remedy provision (see Part 4‑1).

Guarantee is a governing instrument for employment

(7)To avoid doubt, a guarantee of termination entitlements is a governing instrument for employment for the purposes of the Fair Entitlements Guarantee Act 2012.

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.”

  1. The Applicant was entitled to make the application as an employer covered by the Agreement.

  1. The Agreement has passed its nominal expiry date. This application does not rely upon ss.226(1)(b) or (c) of the Act and they are not relevant. Given the basis of this application, and subject to an additional consideration, the Commission is required to terminate the Agreement if satisfied that its continued operation would be unfair for the employees covered by it and that it is appropriate in all the circumstances to do so.

  1. In deciding whether to terminate the Agreement, the Commission is also required to consider the views of any employees who are covered by it, each employer, and each employee organisation (if any).

  1. The employer has made the application and the employee group covered by the Agreement support its termination. The latter aspect has been confirmed by the material[1] before the Commission, including as a result of a process[2] established by the Commission itself. The parties adopt this position, in effect, on the basis that the continued application of the Agreement in the context of the Award and the national Employment Standards (NES) is unfair. That is, the Award and NES provide for a more comprehensive package of wages and conditions that is of greater benefit to the employees. Further, to the extent that any existing individual employees have above award entitlements, these will continue to be honoured.

  1. A review of the Agreement terms in the context of the Award (and the NES which applies in any event) supports this proposition.

  1. UWU has not sought to be heard or advised that it opposed the application.

  1. The Commission is also required to have regard to whether circumstances exist involving notification for a proposed agreement that will cover the same, or substantially the same, group of employees, and where bargaining for the proposed agreement is occurring, and whether the termination of the agreement would adversely affect the bargaining position of the employees that would be covered by the proposed agreement. As no bargaining for a proposed agreement directly involving the Applicant is occurring, this consideration has no bearing on the application.

  1. There is a redundancy clause in the Agreement providing for severance pay entitlements that are more beneficial than the Award. This attracts the operation of s.226A of the Act; being the Guarantee of termination entitlements. A signed Guarantee of Entitlements undertaking has been provided by the Employer to preserve such entitlements for protected employees within the meaning of s.226A(2) of the Act. A copy[3] is attached at Annexure A. I am satisfied that the Guarantee of Entitlements undertaking complies with the requirements set out in s.226A of the Act.

  1. The Commission may also have regard to any other relevant matter. The existence of an informed consent position to terminate the Agreement is also a relevant consideration for the purposes of s.226(5) of the Act in support of granting the application.[4]

  1. I am satisfied that the requirements of s.226 of the Act as are relevant have been met, and in all the circumstances I find that it is appropriate to terminate the Agreement with effect from 11.59pm on 28 May 2024. I so determine and Order accordingly.

  1. Access to a copy of this Decision is to be provided to the relevant employees for their information.


DEPUTY PRESIDENT

Annexure A – Guarantee of termination entitlements

UNDERTAKING – GUARANTEE OF ENTITLEMENTS

  1. I, Tara Ryan, Director of Kidman Park Community Child Care Centre Inc of 2 Francis St, Kidman Park SA 5025, which is the employer on whose behalf this undertaking is given, hereby undertakes to the Fair Work Commission to guarantee to pay the entitlements set out below to any protected employee of the employer (as that term is defined in s.226A(2) of the Fair Work Act 2009 (Cth)) where a protected employee’s employment is terminated whilst this guarantee is in force:

a.At the employer’s initiative because the employer no longer requires the job done by the employee to be done by anyone, except where this is due to the ordinary and customary turnover of labour; or

b.Because of the insolvency or bankruptcy of the employer.

The severance pay entitlements in clause 4.7.7 of the Kidman Park Child Care Centre Enterprise Agreement 2016 will continue to apply to the extent that they exceed those otherwise provided by the Children’s Services Award 2010 and/or the National Employment Standards.

  1. The above entitlements are in addition to any other notice of termination entitlements required to be paid by the Fair Work Act 2009 (Cth).
  1. This undertaking with respect to a guarantee to pay termination entitlements comes into force on the day on which the termination of the Kidman Park Child Care Centre Enterprise Agreement 2016 comes into operation, and ceases at the end of the period of 4 years beginning on the day this guarantee is given to the Fair Work Commission.

Dated 7 May 2024

Signed:

Tara Ryan Director of Kidman Park Community Child Care Centre Inc

Note: Section 226A(2) of the Fair Work Act 2009 defines protected employee as follows:

“(2)A protected employee for a termination of an enterprise agreement under section 226 is an employee who would, but for the termination of the agreement, be covered by the agreement.”


[1] Statutory Declaration of Ms Ryan and the submissions made to the Commission.

[2] The arrangements provided an additional opportunity for any employees wishing to be heard on the application to do so by contacting the Commission directly. No concerns were raised.

[3] An unsigned version is appended for privacy reasons.

[4] See Employee X [2023] FWCFB 155 at [23].

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