Kiera Salerno

Case •

[2023] FWCA 295

•

30 JANUARY 2023
[2023] FWCA 295

FAIR WORK COMMISSION

DECISION

Fair Work (Transitional Provisions and Consequential Amendments) Act 2009

Sch. 3, Item 16 - Application to terminate collective agreement-based transitional instrument

Kiera Salerno

(AG2022/2418)

PUB BANC GROUP PTY LTD EMPLOYEE COLLECTIVE AGREEMENT 2008

Hospitality industry

COMMISSIONER CIRKOVIC

MELBOURNE, 30 JANUARY 2023

Application for termination of the Pub Banc Group Pty Ltd Employee Collective Agreement 2008

  1. On 13 July 2022, Ms Kiera Salerno (the Applicant) filed an application under Schedule 3, Item 16 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (TCPA Act) to terminate the Pub Banc Group Pty Ltd Employee Collective Agreement 2008 (Agreement). The Applicant is an employee of Pub Banc Group Pty Ltd (the Employer or the Respondent), and both are covered by the Agreement. There are no employee organisations covered by the Agreement.

  1. On 6 December 2022, following multiple discussions between the parties and conferences before the Commission, the Applicant filed an amended Form F28 and supplementary declaration F24C, dated 6 December 2022 and declared by herself.

  1. The Agreement is an instrument that was made under the Workplace Relations Act 1996. Its nominal expiry date was 8 May 2014. It is a ‘collective agreement-based transitional instrument’ for the purposes of Item 16 of Schedule 3 of the TPCA Act. The effect of this item is that the termination of agreement provisions found in Subdivision D of Division 7 of Part 2-4 of the Fair Work Act 2009 (FW Act) apply to the Agreement as though a reference to an enterprise agreement included a reference to a collective agreement-based transitional instrument. The result is that application may be made to terminate the Agreement under s.225 of the FW Act.

Legislation

  1. The relevant provision of the TCPA Act is as follows:

“Schedule 3…

…

16 Collective agreement-based transitional instruments: termination by the FWC

(1)Subdivision D of Division 7 of Part 2-4 of the FW Act (which deals with termination of enterprise agreements after their nominal expiry date) applies in relation to a collective agreement-based transitional instrument as if a reference to an enterprise agreement included a reference to a collective agreement-based transitional instrument.

(2)For the purpose of the application of Subdivision D to an old IR agreement, the agreement’s nominal expiry date is taken to be the end of the period of the agreement.”

  1. The relevant provisions of the Fair Work Act 2009 (Act), as of 7 December 2022, are 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.”

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.”

Background

  1. The Application was accompanied by a Form 24C declaration by Ms Kiera Salerno, Bartender, dated 6 December 2022. Ms Salerno submitted that:

  • The Agreement had less beneficial terms and conditions overall than those contained within the Hospitality Industry (General) Award 2020 (the Hospitality Award) and the Restaurant Industry Award 2020 (the Restaurant Award) including, among other items, lower rates of pay, a lack of a consultation mechanism, and leave and redundancy entitlements which were inconsistent with the National Employment Standards;
  • The Agreement provided an inappropriate commercial advantage to the Employer against its competitors, the majority of whom are award-covered employers; and
  • The public interest is not served where an unfair advantage is provided to an employer with an expired enterprise agreement over other employers who are bound by the Awards.

  1. Ms Salerno identified six hospitality venues in Hobart which were operated by the Employer. Those venues are:

  • Observatory Bar;
  • Post Street Social;
  • Republic Bar and Café;
  • Cargo Bar Pizza Lounge;
  • Franklin Wharf Restaurant & Bar; and
  • Jack Greene.

  1. Ms Salerno submitted that upon termination of the Agreement, the Hospitality Award would apply to employees working at Observatory Bar, Post Street Social, and Republic Bar and Café, while the Restaurant Award would apply to employees working at Cargo Bar Pizza Lounge, Franklin Wharf Restaurant & Bar, and Jack Greene.

  1. On 8 December 2022, my Chambers issued Directions to the Applicant to serve a copy of the F24B Application, F24C Declaration, any other material provided to the Commission, and the Directions, on any employee, employer, or employee organisation covered by the Agreement. Parties were then given until 19 December 2022 to respond to the application.

  1. My Chambers received two responses from employees of the company, who will remain anonymous in this Decision. In the first response, received on 9 December 2022, the employee made statements to the effect that:

  • The Agreement, as it currently stands, is outdated;
  • The Agreement places employees below where they would be on any relevant modern award;
  • The employee, and many other employees of the employer, would benefit from the Agreement being terminated; and
  • Termination of the Agreement would “empower employees and work toward moving the company culture into the current age.”

  1. In the second response, received on 19 December 2022, the employee did not provide detailed submissions but nonetheless extended their support in termination of the Agreement.

  1. On 19 December 2022, Mr Ian Vaughan, General Manager of the Employer, filed a statutory declaration Form F24C in support of the termination of the Agreement. Mr Vaughan made submissions to the effect that;

  • The Respondent supported the application for the termination of the Agreement;
  • The Respondent had engaged in negotiations with Mr James Katarzynski of the United Workers’ Union (UWU), and had reached agreement regarding which Award(s) would apply to employees working at each of the Employer’s six venues on the following basis;
  • There are two Awards which could both arguably cover employees at each of the Employer’s venues;
  • The Hospitality Award has general application to venues in the hospitality industry, while the Restaurant Award has specific application to certain types of venues within the industry, including restaurants, reception centres, cafes, and night clubs;
  • For a restaurant venue to be covered by the Restaurant Award, it must exist for the primary purpose of serving meals to customers. Although a bar may be a common characteristic of restaurant venues, these bars will be incidental to the primary function of food service;
  • However, if any “restaurant venue” operates “in, or in connection with, premises owned and operated by an employer otherwise covered by” the Hospitality Award, then coverage reverts back to the Hospitality Award.
  • Cargo, Franklin Wharf, and Jack Greene share a common primary function of meal service and feature incidental sales of alcohol. While Cargo operates as a night club during night-time hours, night clubs are also included in the definition of “restaurant venue” in the Restaurant Award. Accordingly, these venues are all appropriately characterised as restaurant venues under the Restaurant Award.
  • Post Street Social and Republic Bar each have a greater emphasis on alcohol sales, such that the bars at these venues are not incidental to food service. Consequently, these venues more appropriately fall under the general coverage of the Hospitality Award;
  • The final venue, Observatory, is a night club and would ordinarily be classified as a “restaurant venue” and be covered by the Restaurant Award. However, it shares a building with Post Street Social and therefore may operate “in, or in connection with” a premises owned and operated by an employer otherwise covered by the Hospitality Award. Therefore, it is appropriately covered by the Hospitality Award;
  • On termination of the Agreement, employees working at Observatory, Post Street Social, and Republic Bar and Café, would be covered by the Hospitality Award, while employees working at Cargo, Franklin Wharf, and Jack Greene would be covered by the Restaurant Award;
  • The parties must have sufficient confidence in which alternative industrial instrument(s) will apply in lieu of the Agreement after its termination;
  • That it is insufficient for consideration to be limited to a broad view that either alternative Modern Award would have a positive effect for employees; and
  • The Respondent sought to have the parties’ agreement of Award coverage recorded in the Fair Work Commission’s decision.

  1. On 30 December 2022, my Chambers issued further Directions on the Applicant to:

  • File submissions specifically addressing the requirements of the newly amended section 226 of the Act in relation to the termination of the Agreement; and
  • Serve the amended Form F28 and the supplementary declaration referred to in paragraph [2], the new Directions, and the Applicant’s submissions in relation to the new section 226, on any employer, employee, or employee organisations covered by the Agreement.

Any employer, employee or employee organisations were then given until Friday 20 January 2023 to respond to the application.

  1. On 12 January 2023, the Applicant filed further submissions to the effect that:

  • On termination, the Hospitality and Restaurant Awards would apply to the employees currently covered by the Agreement;
  • Due to the less beneficial conditions overall to employees under the Agreement, the continued operation of the Agreement would be unfair for the employees covered;
  • The Applicant and the Respondent both supported termination of the Agreement;
  • Section 226(4) of the FW Act is not presently relevant because there is no bargaining occurring for a proposed new enterprise agreement;
  • Termination of the Agreement would be in line with the Parliamentary intention that “Zombie Agreements” should soon cease to operate and that employees covered by such agreements should become covered by modern awards unless special circumstances exist; and
  • It is appropriate in all of the circumstances, considering each of the relevant criteria in section 226, that the Agreement be terminated.

  1. On 20 January 2023, the Respondent filed a supplementary declaration of Mr Ian Vaughan, which again supported the termination of the Agreement. In his declaration, Mr Vaughan reiterated the submissions of the 19 December 2022 declaration set out in paragraph [12] and made fresh submissions to the effect that:

  • In order to adequately address the factors in section 226, including unfairness, the views of employees, and the effects of termination,  the Commission requires clarity surrounding which specific Award(s) will cover the Respondent’s employees at each of its venues upon termination;
  • It would be problematic for the Employer, the covered employees, and the purposes of the section 226 factors if termination of the Agreement were to proceed without a clearly articulated understanding on what Award is to apply to employees working at each of the Employer’s venues; and
  • That it is essential that the parties’ agreement on Award coverage, the basis of that agreement, and its application, be considered and recorded in the Commission’s decision to terminate the Agreement.

  1. The employees did not provide any further submissions in relation to the termination.

Consideration

  1. As the Agreement has passed its nominal expiry date and the Applicant is an employee covered by the Agreement, I find that the Applicant has standing to make the application pursuant to s.225(b) of the Act.

  1. I accept the Respondent’s submission that in order to adequately address the factors in section 226, the Commission requires a clearly articulated understanding of which Award will apply to the covered employees at each of the Employer’s venues upon termination. I note the parties’ consent position that upon termination:

  • Employees working at Observatory, Post Street Social, and Republic Bar and Café, will be covered by the Hospitality Award; and
  • Employees working at Cargo, Franklin Wharf, and Jack Greene will be covered by the Restaurant Award.

  1. Based on the material contained in the declarations of Ms Salerno and Mr Vaughan, the views received from the employees, and the Applicant’s submissions, I am satisfied that the continued operation of the Agreement would be unfair to the employees covered by it.

  1. Taking into account all of the circumstances including those in section 226(3), (4) and (5), I consider that it is appropriate to terminate the Agreement.

  1. The termination is effective from today.

COMMISSIONER

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