Latrobe Retirement Villages Services Association Inc T/A Latrobe Retirement Village
[2014] FWC 7705
•29 OCTOBER 2014
| [2014] FWC 7705 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.225 - Application for termination of an enterprise agreement after its nominal expiry date
Latrobe Retirement Villages Services Association Inc T/A Latrobe Retirement Village
(AG2014/8822)
COMMISSIONER JOHNS | MELBOURNE, 29 OCTOBER 2014 |
Application to terminate the Latrobe Retirement Village and Registered Nurses Enterprise Agreement 2010-2013.
[1] This decision concerns an application by Latrobe Retirement Villages Services Association Inc (Applicant/Employer) under section 225 of the Fair Work Act 2009 (Act) to terminate the Latrobe Retirement Village and Registered Nurses Enterprise Agreement 2010-2013 (Agreement). The application is opposed by the Australian Nursing and Midwifery Federation (ANMF).
[2] The Agreement is a collective agreement with a nominal expiry date of 31 December 2013. The Agreement currently applies to three employees, two full time staff and one casual employee. However, one of the full time employees is about to commence a period of long service leave before her retirement.
[3] At the hearings on 19 and 22 September 2014, the Applicant was granted permission to be represented by Jenny Fraumano pursuant to s.596(2)(a) of the Act on the basis that the matter was invested with sufficient complexity such that it would assist the Commission in the efficient conduct of the matter. The ANMF was represented by its industrial officer, Sandra Bonavia.
Legislative scheme
[4] Sections 225 and 226 of the Act provide:
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 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.
Submissions of the Employer
[5] The Employer has made the application to terminate the Agreement because of what it says is a continuing obligation under clause 14 of the Agreement which provides:
14. Provision of Accommodation and Utilities
14.1 Permanent Nurses
14.1.1 During the period of employment with the Village, unfurnished accommodation is provided, at the Village for seven (7) days a week, 365 days per year, whether rostered to work or not.
14.1.2 The Employer will also pay the cost of:
(i) All municipal rates,
(ii) All water rates,
(iii) Electricity services fees up to $1500.00 per annum,
(iv) land line telephone connection.
[6] The Applicant submits that, although it has now contracted out after hours nursing services, it remains under an obligation to provide the accommodation. This results in a cost to the Applicant because it cannot otherwise make the empty and unused accommodation available to a new fee paying resident. It additionally has the costs of maintenance and utilities.
Submissions of the ANMF
[7] The ANMF submits that nurses are and will be engaged by the facility in the morning and afternoon shifts. These nurses will still be covered by the Agreement and are therefore still entitled to the benefit of the terms and conditions of the agreement as it currently stands. 1 It says under the Agreement employees enjoy more beneficial personal leave, accident make up pay and are more likely to receive a pay rise through collective bargaining. It submits that termination of the agreement undermines the objections of collective bargaining in the Act. Employees would also lose their unfettered right to arbitration.
[8] Further the ANMF submits that the Applicant would not suffer an economic disadvantage by continuing with the operation of the Agreement. It says there is no need to terminate the Agreement as it submits the Applicant’s interpretation of clause 14 is incorrect. The ANMF submits that clause 14 must be read together with clause 10.2. Clause 10.2 provides:
10.2 On-call:
10.2.1 On Call provide the ability of the Village to meet the emergency requirements of residents only; Nurses are provided with Meals and Accommodation as per Clause 14.
[9] In summary the ANMF says the Applicant is only under an obligation to provide the accommodation while it employs on call nurses.
Consideration
Is termination of the Agreement contrary to the public interest?
[10] In Energy Resources of Australia Ltd v LHMU 2 his Honour Vice President Watson set out the relevant authorities relating to the public interest as follows:
[11] The public interest requirement in s 226(a) is expressed in similar terms to previous s 170MH(3) of the WR Act. That section was subject to consideration by a Full Bench of the AIRC on a number of occasions. Those authorities make it clear that the public interest involves something distinct from the interests of the parties although they may be similarly affected. In Re Kellogg Brown and Root Bass Strait (Esso) Onshore/Offshore Facilities Certified Agreement 2000 4 a Full Bench said (at [22-27]):
“[22] The absence of any reference to the interests of the negotiating parties in s.170MH(3) is significant. It follows that the views of persons bound by the agreement may be relevant to the exercise of the discretion if they shed light upon the effect of termination on the public interest, but they should not be given any independent weight. To do so would be to import into the application of the section something which on its proper construction it does not include.
[23] The notion of public interest refers to matters that might affect the public as a whole such as the achievement or otherwise of the various objects of the Act, employment levels, inflation, and the maintenance of proper industrial standards. An example of something in the last category may be a case in which there was no applicable award and the termination of the agreement would lead to an absence of award coverage for the employees. While the content of the notion of public interest cannot be precisely defined, it is distinct in nature from the interests of the parties. And although the public interest and the interests of the parties may be simultaneously affected, that fact does not lessen the distinction between them.
[24] We were referred to a number of authorities concerning the ascertainment of the public interest. It is sufficient to refer to two. The first is the decision of the High Court of Australia in Queensland Electricity Commission; Ex parte Electrical Trades Union of Australia (the QEC case). In that case the Court was considering the exercise of the discretion conferred on the Conciliation and Arbitration Commission by s.41(1)(d)(iii) of the Conciliation and Arbitration Act 1904. A similar discretion is now conferred upon this Commission by s.111(1)(g)(iii) of the Act. That section reads:
"111 Particular powers of Commission
. . .
(1) The Commission may:
. . .
(g) dismiss a matter or part of a matter, or refrain from further hearing or from determining the industrial dispute or part of the industrial dispute, if it appears:
. . .
(iii) that further proceedings are not necessary or desirable in the public interest;"
[25] The QEC case was concerned with whether or not the Commission had failed to exercise its jurisdiction in upholding an application by the Queensland Electricity Commission to refrain from further hearing or from determining an industrial dispute between it and the Electrical Trades Union of Australia. The following passage appears in the joint judgement of the majority:
". . . Ascertainment in any particular case of where the public interest lies will often depend on a balancing of interests, including competing public interests, and be very much a question of fact and degree. In this case the Commission was called upon to weigh in the balance two competing public interests. One was the importance of settling in its entirety the dispute initiated by the E.T.U.'s log of claims. The other was the importance of leaving the dispute to be resolved by the State tribunal despite the limitations on its jurisdiction if that course was likely to maintain the marked improvement in industrial relations in the industry that had occurred since the dispute arose and thereby contribute to industrial peace and an efficient power supply.”
[26] It is clear from this passage that the ascertainment of the public interest may involve balancing countervailing public interests. That the Commission should take all of the circumstances into account is made clear by Dawson J in Re Australian Insurance Employees Union; Ex parte Academy Insurance Pty Ltd. These authorities provide useful general guidance in the application of the test in s.170MH(3). They illustrate the types of interests which can be properly described as public interests and confirm the breadth of circumstances which may be relevant to the ascertainment of those interests.
[27] It should be emphasized that the Commission's consideration of the public interest for the purpose of s.170MH(3) is directed to the consequences of terminating the agreement. In a given case, some consequences will be clearly predictable, others will be less so. For the most part the Commission should be guided by the likely foreseeable consequences of termination rather than speculation about possible consequences.”
(references omitted)
[11] The parties submitted the following in relation to the public interest:
(a) Applicant
The Applicant submits there is not a broad public interest factor in this matter. 3 The
Applicant stated it was their view that there would be no disadvantage in future
bargaining. 4
(b) ANMF
The ANMF submits that it is against the public interest to terminate the Agreement because it negatively impacts on existing and future employees of the Employer. 5 It says nurses are and will be engaged by the Applicant in the am and pm shifts and are therefore entitled to the benefit of the terms and conditions of the Agreement as it currently stands.6
The ANMF submits that the object of the Act includes a positive obligation to promote collective bargaining. 7 Therefore, it says, termination of the agreement undermines the objectives of collective bargaining as described in the Act.8 Furthermore, it says there is an interest in moving beyond the minimum terms and conditions of the Nurses Award 2010.9
[12] Having regard to all that has been submitted in this matter the Commission, as presently constituted, is not persuaded that if the Agreement is terminated any public interest issues arise. To the extent that the termination may have an impact on employees and future employees these matters are to be addressed under s.226(b) (below). The Commission is also not persuaded that the termination of the Agreement will undermine collective bargaining in a broader public sense (as opposed to the impact it might have on the bargaining position of the respective parties). Further, if the Agreement is terminated then the employees will retain the modern award as their safety net. It cannot be said that the fall back position of the modern award is against the public interest.
[13] Consequently, the Commission, as presently constituted, finds that the termination of the Agreement is not contrary to the public interest.
Is termination of the Agreement appropriate in the circumstances?
Views of the parties s.226(b)(i)
[14] The Commission is required to take into account the views of the parties in deciding whether to terminate the Agreement.
Views of employees
[15] The Commission heard evidence from Ms Kerrie Pritchard, a Registered Division 1 Nurse currently employed by the Employer. In summary her evidence was that:
(a) She has been employed there for three years and three months; 10
(b) She does on-call duties from 4.30pm on Thursday to 8.30am on Monday. Another employee, Margaret Smyth does the remaining days; 11
(c) Mrs Smyth is about to commence long service leave and will then retire; 12
(d) Mr Michael Smyth (Retirement Village Manager) was unable to find a replacement for night duties for Mrs Smyth; 13
(e) She was involved in discussions with Mr and Mrs Smyth about alternatives to provide coverage if they couldn’t employ anyone to do the on-call overnight; 14
(f) The residents at the village have always sought to have their own registered nurses employed; 15
(g) A proposition was put to the residents of the village to outsource on call duties to Illawarra Nursing Service; 16
(h) She was looking forward to getting off night duty. She discussed her hours with Mr Smyth and she was happy with the hours he proposed; 17
(i) She was happy with the terms and conditions Mr Smyth put forward should the Agreement be terminated; 18
(j) She only used the unit provided by the Village under the agreement while she was doing on-call duties. 19
In cross examination, Ms Pritchard said:
(a) She could not recall her Employer explaining to her the difference between her terms and conditions being contained in an enterprise agreement as opposed to a contract of employment; 20
(b) Her employer did not invite her to seek advice externally either through a union or own independent advisor; 21
(c) The loss of her automatic right to arbitration in the Commission was not explained to her, however it would not have changed her opinion about the new arrangement Mr Smyth is proposing. 22
Views of employer
[1] The Applicant led evidence from Mr Michael Smyth (Retirement Village Manager). In summary, his evidence was that:
(a) “Our village is 25 years old and in the first instance 25 years ago they established the method of having nurses on site 24 hours a day. And traditionally there were two nurses, they would work different days and they would do their stand-up shift during the day, and then be provided with accommodation and stay on-site for the full 24 hours. Now, that was 25 years ago and that worked well in those days, in the good-old days, as they say. Time has changed of course as we moved along and in 2010 the nurses went to a federal award which created many challenges for a lot of villages. And at that time, many of the villages went to a system of having nurses only during the day and an outsourced call service for overnight. At that time, because of the longevity of the situation that had been established at Latrobe Village all those years ago, the residents expressed a wish to continue on with that same system. I was at that time able to facilitate that, facilitate their wishes, and continue on with an agreement, a bargaining agreement that was reached for those services to continue as they were for all those previous years. More recent times, it is becoming increasingly difficult to find staff experienced enough to want to come on board and do those same work days, same conditions and hours that were worked for all those years. And hence, it has brought us to this situation where we need to make change. It is necessary that we do that so that we can still provide some sort of nursing service to them.” 23
(b) When he realised he was not able to recruit a replacement for Mrs Smyth, he began investigating outsourcing the out of hours on call service. Mrs Smyth and Ms Pritchard were involved in discussions around the potential change; 24
(c) Ms Pritchard was very happy to no longer work on-call hours; 25
(d) “(W)e would hate to have to even consider [not employing a nurse], but if we can't resolve this matter I suppose we would have to look at that. And many other villages don't employ nurses. But we certainly don't want to do that and it's not our intention, and I am hopeful that through all this I can set up a system where the village residents, whom I love dearly and I have served for 15 years, will be set up for a further long period of time with what I believe will be a very good and sustainable system for their health needs.” 26
(e) He has never during the time he has employed people (some 50 years) had a dispute with an employee about employment related matters. 27
[1] In cross examination Mr Smyth stated:
(a) “(T)he existing current enterprise agreement was put in place for a specific purpose. The specific purpose of that was so we could have the nurses there overnight. When the awards changed in 2010, it was said that it was no longer able to employ a nurse for a 24 hour period. The ANF said no you can't do that, you will have to employ three nurses, three shifts, stand-up nursing. And we disputed that and we went and sought advice about that and the advice was that if we entered into this arrangement we would be able to continue to employ the nurses as we have been for this period of this agreement. So, at that point in time we were faced with a decision whether to cut the nurses back then or to continue to employ them as they had been for the previous 21 years or so. 28
(b) The cost of not being able to rent out a unit of the Village could amount to approximately $10 000 annually.
Views of the ANMF
[1] For the reasons set out in its email to the Commission dated 9 September 201429 the ANMF opposes the termination of the Agreement. In summary, the ANMF says:
(a) it is concerned that terminating the expired Agreement will disadvantage both remaining and new employees;
(b) the expired Agreement applies to all employees, including those not engaged in regular day work;
(c) the safety net in relation to personal leave, accident pay and wages would be significantly undermined if the Agreement is terminated;
(d) the Objectives of the Fair Work Act 2009 (Cth) in relation to collective bargaining are undermined as it is understood there is no intention of the Applicant to make a replacement agreement;
(e) access to effective dispute resolution procedures and disciplinary procedures will be affected as the Agreement provides an unfettered right to proceed to arbitration (the Nurses Modern Award requires consent to arbitration); and
(f) there is a concern about long service leave entitlements.
Likely effect of termination s.226(b)(ii)
[1] In Exhibit “ANMF1” the ANMF sets out what it says will be the impact on employees of the termination of the agreement. In essence the ANMF says under the Agreement employees enjoy more beneficial personal leave, accident make up pay and are more likely to receive a pay rise through collective bargaining. Employees would also lose their unfettered right to arbitration because the Nurses Award 2010 only provides for consent arbitration.
[2] In response the Applicant says the ANMF is wrong about its assessment of the impact on employees because the Applicant will maintain contractually for current employees more beneficial terms that are contained in the Agreement (except the unfettered right to arbitration). 30
[3] Further, the Applicant says the ANMF is wrong about its assessment of the impact on the Employer.
[4] The Applicant says if the Agreement continues to operate it will cause it economic disadvantage because it will be required to keep vacant and available accommodation for nurses in circumstances where it has outsourced “on-call”. The Applicant says that, consequently, it will lose revenue that it would be able to achieve if it could make the accommodation available to a new resident. Further, that it will continue to incur costs (maintenance and utilities) in respect of a premises that will remain unused.
[5] The above asserted consequences for the Applicant arise out of an interpretation of the Agreement that would require the Applicant to continue to hold accommodation available even when on-call nurses are not employed by it.
[6] The ANMF says the Applicant’s belief or fear in this regard is misplaced. The ANMF says that a proper interpretation of the Agreement relieves the Applicant of the obligation to provide accommodation when it no longer employs “on-call” nurses. It submits that clause 14 of the Agreement must be read together with clause 10.2.
[7] It is the ANMF’s submission that the reference to “Permanent Nurses” in clause 14.1 means “on-call” nurses. Therefore it submits that the Applicant is only under an obligation to provide the accommodation during a period of employment of “on-call” nurses. If it no longer employs “on-call” nurses, it does not need to provide the accommodation.
[8] To determine if what the Applicant says is the consequential detriment of not terminating the Agreement, it is necessary to interpret the meaning of clause 14 in the context of the Agreement as a whole.
[9] The proper approach to the interpretation or construction of industrial instruments has been considered in a number of decisions. In the present matter the Commission, as presently constituted, has had regard to, and adopts the legal principles arising out of: Short v FW Hercus Pty Ltd (1993), 31 Kucks v CSR Limited (1996),32 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd and Orthers (2004),33 Amcor Limited v CFMEU, (2005),34 City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union (2006),35 AMIEU v Teys Australia Beenleigh Pty Ltd, (2014).36
[10] In the present matter the interpretation of clause 14 advanced by the Applicant is narrow and pedantic. It is an interpretation that should be resisted. If the Applicant is correct, then it would visit upon it an unfairness and injustice. It would require the Applicant to keep vacant accommodation that could otherwise be made available for a new fee paying resident in circumstances where the Applicant no longer employs nurses on-call.
[11] This Commission should attribute to the parties who negotiated the Agreement an intention that the Agreement operate in a sensible way. It cannot have been the objective intention of the parties that such an unfairness or injustice was to be visited upon the Applicant. Accordingly, the interpretation of the Agreement advanced by the ANMF is to be preferred. It is the only interpretation that “contributes to a sensible industrial outcome” as Kirby J decided was necessary in Amcor.
[12] It makes no sense that the Applicant has to keep vacant accommodation available. Consequently, the Commission, as presently constituted, positively finds that no such obligation is imposed on the Applicant. Therefore, to the extent that the Applicant has proceeded on that basis in making this application, it has been under a misunderstanding. Consequently, its sole motivation for the termination of the Agreement was based on a false premise.
[13] The likely effect of the termination of the Agreement is therefore not that the Applicant will be relieved from an obligation to keep accommodation vacant. If the Agreement continues, there is no adverse economic impact on the Applicant. It is free to make the accommodation available to a fee paying resident in circumstances where it no-longer engages on-call nurses. Of course, if the Applicant decides to revert to employing ‘on-call’ nurses then the obligation to provide accommodation will be re-enlived.
[14] However, there are disadvantages to the employees and future employees (who do not have the benefit of the contractual promises the Applicant has made to current employees) as the ANMF has highlighted. The detriments to future employees in particular and the loss of compulsory arbitration are detriments which outweigh the lack of any detriment caused to the Applicant if the Agreement continues to operate.
Conclusion
[15] The Commission, as presently constituted, has reached the following conclusions for the reasons outlined above:
(a) that termination of the Agreement is not contrary to the public interest, but
(b) that it is not appropriate to terminate the Agreement having regard to all of the circumstances of the matter.
[1] The Application is dismissed. An order to this effect will be issued in conjunction with this decision.
COMMISSIONER
Appearances:
J Fraumano for the Applicant.
S Bonavia for the ANMF.
Hearing details:
2014
19 and 22 September
Melbourne
1 PN303.
2 [2010] FWA 2434.
3 PN17.
4 PN19.
5 PN302.
6 PN303.
7 PN313.
8 PN315.
9 PN311.
10 PN90.
11 PN91-93.
12 PN94-95.
13 PN99-100.
14 PN101.
15 PN107.
16 PN102-108.
17 PN109.
18 PN110.
19 PN113.
20 PN123-128, 131-134.
21 PN129.
22 PN150-157.
23 PN170.
24 PN172.
25 PN175.
26 PN183.
27 PN186, 232.
28 PN191.
29 Exhibit ANMF 1.
30 Exhibit “F1”.
31 (1993) 40 FCR 511.
32 (1966) 66 IR 182.
33 (2004) 219 CLR 165.
34 (2005) 222 CLR 241.
35 (2006) 153 IR 426.
36 [2014] FWCFB 5643.
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