Kingfield Galvanising Pty Ltd

[2020] FWCA 5236

[2020] FWCA 5236

FAIR WORK COMMISSION

DECISION

Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
Item 16 Sch. 3—Termination of transitional instrument

Kingfield Galvanising Pty Ltd
(AG2020/2784)

KINGFIELD GALVANIZING PTY LTD ENTERPRISE AGREEMENT 2008

Manufacturing and associated industries
DEPUTY PRESIDENT MASSON	MELBOURNE, 5 OCTOBER 2020

Application for termination of the Kingfield Galvanizing Pty Ltd Enterprise Agreement 2008.

[1] Kingfield Galvanising Pty Ltd (the Applicant) has applied, pursuant to Schedule 3, Item 16 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Transitional Act) to terminate the Kingfield Galvanising Pty Ltd Enterprise Agreement 2008 (the Agreement). The Agreement is expressed to cover the Applicant and the relevant employees within the scope of the Agreement. The Agreement has passed its nominal expiry date.

[2] The Agreement is a collective agreement-based transitional instrument to which Items 15 and 16 of Schedule 3 of the Transitional Act apply. The effect of Items 15 and 16 of Schedule 3 of the Transitional Act is that the termination of agreement provisions found in Subdivisions C and D of Division 7 of the Fair Work Act 2009 (the Act) apply to the Agreement as though a reference to an enterprise agreement included a reference to a collective agreement-based transitional instrument.

[3] 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.”

[4] 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.”

[5] The application filed was accompanied by a Statutory Declaration of Ms Erin Englezakis (People & Culture Manager) for the Applicant. Ms Englezakis variously deposed in the Statutory Declaration that;

• The coverage of the Agreement is set out in clause 3 and states as follows;

“Clause 3 Application

This agreement shall apply to all employees of Kingfield Galvanising Pty Ltd who are employed to perform activities covered by the Metal, Engineering & Associated Industries Award 1998 at the Company’s premises at 166 Northbourne Road Campbellfield.”

• The Agreement passed its nominal expiry date on 4 June 2011.

• On 17 April 2015 the Company closed its Campbellfield operations and moved to 35 O’Herns Road Somerton and that since that time all new employees have been engaged under the Manufacturing and Associated Industries and Occupations Award 2010 (the Modern Award).

• Reference in the Agreement to the Metal, Engineering & Associated Industries Award 1998 (the Pre-reform Award) creates confusion as to the relevant and applicable industrial instruments as there remains 19 employees covered by the Agreement.

[6] As regards the effects of the proposed termination of the Agreement on employees covered by it, Ms Englezakis stated that the following changes in their terms and conditions would occur;

• Following termination of the Agreement, the long service leave rate of accrual of affected employees would reduce to a less beneficial entitlement provided by the Victorian Long Service Leave legislation. However, accrued long service leave balances of affected employees at the date of termination of the Agreement would be preserved.

• The capacity for affected employees to cash out their personal leave balances in excess of 10 days on an annual basis would be removed. The accrued personal leave balance of affected employees at the date of termination of the Agreement would be “frozen” and held for the benefit of employees in terms of access to and/or payout on termination of their employment in accordance with clause 12 of the Agreement. Subsequent to termination of the Agreement, personal leave entitlements would accrue and be applied in accordance with the National Employment Standards (NES).

[7] Ms Englezakis also detailed the consultation that the Applicant had engaged in with affected employees as follows;

• A number of meetings were conducted by Ms Englezakis with affected employees including on 2 September 2020, a record of attendance at which was attached to Ms Englezakis’s statutory declaration. A spreadsheet of each employee’s accrued entitlements was provided by the Applicant to affected employees.

• Having regard to the ethnic background of certain employees and concerns as to their English language proficiency, meetings with those employees were supported by the presence of more senior staff of the relevant ethnic background capable of interpreting and answering questions.

• All affected employees were provided with a personal letter from the Applicant detailing the change in employment conditions that would arise from termination of the Agreement. The letters also contained undertakings from the Applicant in relation to the preservation of accrued long service leave and personal leave balances at the date of termination of the Agreement. All affected employees acknowledged the undertakings and indicated their agreement to the termination of the Agreement by signing their respective letters.

[8] The Applicant also submits that displacement of the Pre-reform Award with the Modern Award as the underpinning instrument for the affected employees’ terms and conditions would not negatively impact those employees. The Applicant referred to the award modernisation request and the decision 1 of the Full Bench when it relevantly stated;

“The consolidated request also provides that the process is not intended to disadvantage employees or increase costs for employers – objectives which are potentially competing. The content of the awards we have formulated is a combination of existing terms and conditions in relevant awards and existing community standards. In order to minimise disadvantage to employees and increases in costs for employers we have generally adopted terms and conditions which have wide application in the existing awards in the relevant industry or occupation…..” 2

[9] The Applicant further submits that to the extent that there may have been any initial reduction or loss of conditions when the Modern Award was made when compared to the Pre-reform Award, any detriment will have been long since erased through the progressive increases in allowance and wage rates in the Modern Award over the past 10 years.

[10] In dealing with the application, directions were sent out by my Chambers on the 22 September 2020, which stipulated that if employees of the Applicant covered by the Agreement wished to make submissions on the termination of the Agreement they were to do so by close of business Friday 2 October 2020. No written submissions were provided by any employees covered by the Agreement.

Consideration

[11] As the Agreement has passed its nominal expiry date and the Applicant is an employer covered by the Agreement, I find that the Applicant has standing to make the application pursuant to section 225(a) of the Act.

[12] No opposition to the application was received for or on behalf of any employees.

[13] Based on the material contained in and attached to the employer’s declaration filed with the application, I am satisfied that termination of the Agreement is not contrary to the public interest. Taking into account all of the circumstances including those in s.226(b)(i) and (ii), I consider that it is appropriate to terminate the Agreement. There is nothing before me which raises public interest considerations which might militate against termination of the Agreement. I am consequently satisfied that it is appropriate to approve the termination of the Agreement, and I so terminate the Agreement.

[14] The termination will operate from 5 October 2020 and a separate order giving effect to my decision will be issued in conjunction with this decision.

DEPUTY PRESIDENT

 1   [2009] AIRCFB 800

 2   Ibid at [4]

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