Leidos Airborne Solutions Australia Pty Ltd T/A Cobham Aviation Services
[2024] FWC 1542
•14 JUNE 2024
| [2024] FWC 1542 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.225 - Application for termination of an enterprise agreement after its nominal expiry date
Leidos Airborne Solutions Australia Pty Ltd T/A Cobham Aviation Services
(AG2024/673)
| DEPUTY PRESIDENT ANDERSON | ADELAIDE, 14 JUNE 2024 |
Application for termination of the Jet Systems Special Operations Control Enterprise Agreement 2017
On 10 March 2024 Leidos Airborne Solutions Pty Ltd T/A Cobham Aviation Services (Leidos, the employer or the applicant) applied under s 225 of the Fair Work Act 2009 (Cth) to terminate the Jet Systems Special Operations Control Enterprise Agreement 2017 (the Agreement).[1] The Agreement passed its nominal expiry date on 30 June 2021.
The application was supported by a Form F24C statutory declaration of Ms Alexandra McFayden, Head of Workplace Relations, dated 10 March 2024, which declared, amongst other things, that the continued operation of the Agreement would be unfair to employees covered by it, given that:
the Agreement covers a small number of employees performing clerical functions in the control room of Cobham Aviation Services;
the Agreement was negotiated in 2017 and made and approved in 2018 by a predecessor employer; Jet Systems Pty Ltd. Jet Systems was acquired by Leidos in October 2022;
no employee organisation is covered by the Agreement;
although it was a term of the agreement that bargaining for a new agreement would commence before its nominal expiry, no such bargaining was commenced by Jet Systems or occurred at that time or since; and
the Agreement has fallen into disuse and its terms and conditions are now inferior to those provided for by the relevant modern award and common law contracts between Leidos and the control room employees.
I issued directions on 14 March 2024 requiring Leidos to serve the application and supporting declaration on all employees covered by the Agreement and notify of a directions hearing on 3 April 2024. I directed that any employee or employee organisation with an interest notify my chambers by 28 March 2024. None did so.
In accordance with my directions of 14 March 2024, Leidos filed a second statutory declaration of Ms McFayden dated 22 March 2024 which declared that service had been made on all employees as directed.
I conducted a directions hearing on 3 April 2024. Leidos appeared. No employee interests appeared. At that time, I issued further directions, listed the matter for hearing on 16 May 2024, and required Leidos to again serve the directions and Notice of Listing on all employees covered by the Agreement. I directed that any employee or employee organisation with an interest in the matter notify my chambers by 19 April 2024. None did so.
In accordance with my further directions of 3 April 2024, Leidos filed a third statutory declaration of Ms McFayden dated 19 April 2024, which declared that all employees had been further notified as directed.
I heard the matter on 16 May 2024. Leidos appeared. No employee interests did so.
During the hearing I heard further from Ms McFayden on her declaration of 10 March 2024 and the grounds on which the application is advanced.
I raised five issues with Leidos on which the Commission required further information before a decision could be made. This included the desirability of Leidos providing a formal undertaking, in the terms of its submission, that wages and remuneration payable to existing employees covered by the Agreement would not be reduced from their current entitlements under the Agreement should it be terminated.
On 6 June 2024 Leidos filed a final written submission via its representative addressing each of the five issues raised. It included an undertaking in the aforementioned terms.
Being satisfied that I have all relevant material before me, I proceed to determine the matter.
Legislative provisions
The relevant provisions of the FW Act[2] 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.”
Consideration
I am satisfied that Leidos has standing to make this application as it is an employer covered by the Agreement. This is because it is a successor to the named employer (Jet Systems).
The application is not opposed by any employees or an employee organisation. No employee organisation is covered by the Agreement and no employees who are covered appeared in proceedings despite being provided notice. Accordingly, as the application is not opposed I am able to determine this matter. It is not required to be referred to the President for a Full Bench hearing under s 615A(3).
The ground on which termination is sought is s 226(1)(a),[3] that the continued operation of the Agreement would be unfair for the employees covered by the Agreement.
Subsections (1)(b) and (c) were not advanced as grounds and do not apply. Nor does s 226(2).
Would the continued operation of the Agreement be unfair to employees covered by the Agreement?
Based upon the further information provided by Leidos, thirteen employees are currently covered by the Agreement. This comprises ten full time employees, two full time employees with fixed tenure, and one casual employee.
In support of the application Leidos submitted a comparative table of provisions of the Agreement with the modern award that would otherwise apply, should the Agreement be terminated. That is the Clerks Private Sector 2020 Award.
Where an employer appears before the Commission seeking to terminate an agreement under s 225 on the ground that its continued operation would be unfair to employees when compared to an underlying award, this submission requires close scrutiny. This is especially so if, as in this matter, at the time the agreement was approved the FW Act required the Commission to be satisfied that employees would be better off overall under the agreement than the underlying award. The obvious question in termination proceedings based on a ground of comparative unfairness is what has changed to warrant a different and somewhat opposite conclusion about relative advantage and disadvantage?
In this matter the terms of the Agreement have not been varied since it was negotiated in 2017 and commenced in 2018. That is six years ago. In that time, rates of pay and allowances under the Clerks Private Sector 2020 Award have increased. Employees covered by the Agreement would, if paid simply what the Agreement provides, receive less than the modern award. As the FW Act prohibits this, Leidos increased remuneration regularly since the nominal expiry of the Agreement to ensure that employees are not paid below the modern award. In addition, Leidos has provided a range of enhanced terms concerning wages and conditions, drawn from its standard employee benefits, since acquiring the business of Jet Systems in 2022.
Leidos also informed the Commission that whilst common law contracts which include some of these above award entitlements exist, there are no Individual Flexibility Agreements in place despite the Agreement having made provision for them.
Leidos also clarified, in its final written submission, a correction to its comparative table concerning weekend penalty rates for day workers, noting that the thirteen existing employees are not day workers but in fact seven day shift workers and receive the loading applicable to that roster.
Materially, Leidos provided a written undertaking in the following terms:[4]
“Leidos Airborne Solutions Pty Ltd undertakes that wages and remuneration payable to existing employees covered by the Agreement will not be reduced from their current entitlement under the Agreement should the Agreement be terminated.”
I attach to this decision a copy of the undertaking.
Considering these factors collectively, the evidence before me, and noting the absence of any contradictor or opposing employee interests, I am satisfied that the continued operation of the Agreement would be unfair for employees covered by the Agreement.
Section 226(1)(a) is made out.
The considerations at s 226(4) are not relevant as bargaining is not occurring with respect to a new agreement. I have observed that although it was a term of the Agreement that bargaining for a new agreement would commence before its nominal expiry, no such bargaining was commenced by Jet Systems or occurred at that time or since.
I am satisfied that there are no other relevant matters to take into account (s 226(5)) in deciding whether to terminate the Agreement.
Conclusion
Having regard to s 226(1A) of the FW Act, I am satisfied that it is appropriate in all of the circumstances to terminate the Agreement . Accordingly, I must do so.
The application to terminate the Jet Systems Special Operations Control Enterprise Agreement 2017 is approved.
It will take effect from 12:01am on 1 July 2024. This period of prospectivity will allow relevant employees to be notified of this decision.
I issue an order[5] to this effect in conjunction with this decision.
DEPUTY PRESIDENT
Appearances:
A. McFayden, on behalf of Leidos Airborne Solutions Australia Pty Ltd T/A Cobham Aviation Services.
Hearing details:
2024.
Adelaide;
16 May.
Final written submissions:
Leidos Airborne Solutions Australia Pty Ltd T/A Cobham Aviation Services: 6 June 2024.
[1] [2018] FWCA 2999
[2] Schedule 1 Part 12 Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (commencement 7 December 2022)
[3] Fair Work Act 2009 (Cth)
[4] Undertaking 6 June 2024
[5] PR775998
Printed by authority of the Commonwealth Government Printer
<PR775997>
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