Laing O'Rourke Australia Pty Ltd

[2016] FWCA 6057

[2016] FWCA 6057

FAIR WORK COMMISSION

DECISION

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

Laing O'Rourke Australia Pty Ltd
(AG2016/2944)

LAING O'ROURKE AUSTRALIA CONSTRUCTION PTY LTD & CFMEU (WA) - WA RAIL INFRASTRUCTURE - RAIL TRACK AND ASSOCIATED WORKS WORKPLACE AGREEMENT 2010-2012

Building, metal and civil construction industries
DEPUTY PRESIDENT LAWRENCE	SYDNEY, 26 AUGUST 2016

Application for termination of the Laing O'Rourke Australia Construction Pty Ltd & CFMEU (WA) - WA Rail Infrastructure - Rail Track and Associated Works Workplace Agreement 2010-2012.

Introduction

[1] On 27 April 2016 Laing O’Rourke Australia Pty Ltd (the Applicant) lodged an application to terminate the Laing O’Rourke Australia Construction Pty Ltd & CFMEU (WA) – WA Rail Infrastructure – Rail Track and Associated Works Workplace Agreement 2010-2012 (the Agreement) pursuant to s.225 of the Fair Work Act 2009 (the Act).

[2] The application identified Laing O’Rourke Australia Construction Pty Ltd, (the employer entity) as the subsidiary company which is the actual employer.

[3] The Construction, Forestry, Mining and Energy Union (the CFMEU) is the union covered by the Agreement and it opposes its termination.

Background

[4] This matter is part of a collection of applications by the Applicant to terminate agreements on behalf of its subsidiary legal entities. These were all lodged on 27 April 2016.

[5] Forty one (41) applications were lodged to terminate specified agreements pursuant to s.225 of the Act (including this one).

[6] Eighty five (85) applications were lodged to terminate specified agreements pursuant to Schedule 3, Item 16 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (the Transitional Act).

[7] In respect of all of these applications, the Applicant submitted that each agreement:

● Has passed its nominal expiry date.

● No longer serves any purpose because the project or site work for which it was made is now finished or the period for which it was made has passed and it has been superseded.

● There are no longer employees employed under the agreements.

● Accordingly, it is in the public interest for them to be terminated.

[8] The statutory declaration was made by Mr Andrew Nolan, the Applicant’s Head of Employee and Industrial Relations.

[9] The following organisations were covered by at least some of the agreements:

● “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU)
● Australian Workers’ Union (AWU)
● Construction, Forestry, Mining and Energy Union (CFMEU)
● Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU)
● Australian Rail, Tram and Bus Industry Union (RTBU)

[10] My decision with respect to the s.225 applications is [2016] FWCA 3975 and with respect to the Schedule 3, Item 16 applications is [2016] FWCA 3975.

[11] The process of consultation between the Commission, the Applicant and the five unions is set out in some detail in those decisions.

[12] There was ultimately consent with respect to all of the terminations apart from this application.

[13] I decided to terminate all of the agreements pursuant to s.226 of the Act. I was satisfied it was not contrary to the public interest to terminate the agreements.

[14] I also exercised my power pursuant to s.586 of the Act to correct/amend the applications to make it clear that the specified legal entities who are the employers covered by the relevant agreements are the applicants. I accepted that the Applicant is the parent company and had the authority to make the applications. Faced with 120, or so, applications to terminate various agreements, I was satisfied that such an amendment was justified, taking into account all of the circumstances.

Commission Proceedings

[15] This matter was set down for hearing on 3 August 2016 and directions issued.

[16] The Applicant lodged an outline of submissions and a witness statement of Mr Andrew Nolan.

[17] The CFMEU lodged an outline of submissions and a witness statement of Mr Walter Molina, an official of the Western Australian Branch.

[18] The Applicant was represented at the hearing by Mr P. Ludeke. Mr Ludeke was granted permission to appear pursuant to s.596 of the Act. The CFMEU was represented by Mr P. Boncardo. The respective witnesses were not required for cross-examination.

Legislative Provisions

[19] The Commission must terminate an enterprise agreement when an application is made under s.225, where the requirements contained in s.226 are met.

[20] The relevant provisions are:

“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 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 When FWC must terminate an enterprise agreement

If an application for the termination of an enterprise agreement is made under section 225, FWC must terminate the agreement if:

(a) FWC is satisfied that it is not contrary to the public interest to do so; and

(b) 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.

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.”

Terms of this Agreement

[21] The Agreement was approved on 25 January 2011 and its nominal expiry date was 31 October 2011.

[22] The area and scope of the Agreement as set out in clause 1.2 was as follows:

“1.2 AREA AND SCOPE

This Agreement shall apply only to work performed by employees of Laing O'Rourke Australia Construction Pty Ltd engaged on rail infrastructure projects performing - track and associated works on the suburban rail network within Perth City and near environs.”

[23] It was not contested that the Agreement has not been updated since it was made. The wage rates and allowances are as at 1 November 2010.

The Applicant’s Case

[24] The Applicant submitted that the Commission should exercise its discretion under s.586 to add Laing O’Rourke Australia Construction Pty Ltd as an applicant.

[25] The Applicant further submitted that the tests set out in s.226 of the Act are satisfied so that it is not contrary to the public interest to terminate the Agreement. In particular, there are no employees covered by the Agreement and neither party has sought to update the Agreement.

[26] It was submitted that the CFMEU’s opposition was purely speculative in that it was concerned that there might be a lesser base for negotiation of a replacement agreement if the Applicant or a subsidiary secured work within the coverage of the Agreement and directly employed workers were engaged.

[27] The Applicant referred to the Full Bench decision in Aurizon Operations Limited; Aurizon Network Pty Ltd; Australia Eastern Railroad Pty Ltd [2015] FWCFB 540(Aurizon). It pointed out that theoretical concern about future work is not a test under s.226. As to the jobs referred to by the CFMEU, it had no intention to employ direct labour on any of them.

[28] Mr Nolan, in his statement, explained that the reason for the applications to terminate the 120 or so out of date agreements was because the Australian business was being prepared for sale. He confirmed that the Applicant, and any subsidiary, is not currently tendering for any rail jobs in Western Australia.

The CFMEU’s Case

[29] The CFMEU submits that the application should be dismissed because it was not made by the legal entity that is the employer. The CFMEU is opposed to the Commission using its discretion pursuant to s.586 to amend the application.

[30] The CFMEU submits that the Agreement has not been superseded by another agreement. Any future employee on rail construction work in Perth would be employed under the Building and Construction General On-site Award 2010 [MA000020], as a starting point, rather than the Agreement. They would therefore suffer disadvantage.

[31] It is contended that the Agreement covers work within its incidence, even though there are no direct employees. It is therefore not in the public interest for the Commission to terminate the Agreement.

[32] Mr Molina’s statement referred to rail work within Perth for which, he understood, the Applicant was tendering. He did not suggest, however, that the CFMEU would seek to use this Agreement to cover any such employees in the future. Rather, it was a question of what would be the starting point for bargaining for a new agreement.

Consideration

[33] In my view it is important to remember that this application was one of over 120 applications by the Applicant to terminate various agreements. After an extensive process of consultation, it was the only one where there was no consent. I accept the Applicant’s explanation of the reason for the applications which relate to its future sale.

[34] In my two previous decisions I exercised my discretion, pursuant to s.586 of the Act to correct/amend the applications to make it clear that the specific legal entities who are the employers covered by the relevant agreements are the applicants. There was no opposition by the unions in respect of all the other applications.

[35] Therefore, pursuant to s.586 of the Act, this application is taken to have been made by Laing O’Rourke Australia Construction Pty Ltd.

[36] Under s.226 I must terminate an expired agreement, if I am satisfied that it is not contrary to the public interest and it is appropriate to terminate the Agreement, taking into account all of the circumstances, including the matters in s.226(b). I can find nothing in the public interest which would prevent the Agreement from being terminated.

[37] It is conceded that there are no employees and, on the evidence of Mr Nolan, no realistic chance of there being any employees who are, or would be, covered by the Agreement. There is no evidence that the termination of the Agreement would disadvantage any employees.

[38] This Agreement is different to most of the other agreements of the Applicant which have been considered by the Commission in this exercise. It was not made for one project, which has now clearly, finished. The incidence of the Agreement broadly refers to railway infrastructure construction work in Perth. However, there is no such work to which the Agreement applies. I can understand that the CFMEU might want to keep the Agreement in operation as a starting point for bargaining. However, the rates and allowances are six years out of date. The CFMEU does not submit that the Agreement would be applied to the relevant employees, if and when there are employees covered by the Agreement.

[39] Accordingly, I consider that it is appropriate to terminate the Agreement, taking into account all the circumstances, including the matters in s.226(b).

[40] An Order [PR584688] terminating the Agreement will be issued together with this decision.

DEPUTY PRESIDENT

Appearances:

P Ludeke, solicitor for the Applicant;

P. Boncardo for the CFMEU.

Hearing details:

2016

Sydney:

August 3.

Printed by authority of the Commonwealth Government Printer

<Price code C, AE883794  PR584687>