Lower North Shore Community Transport Inc T/A Community Connect Transport Services

[2017] FWCA 5232

[2017] FWCA 5232

FAIR WORK COMMISSION

DECISION

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

Lower North Shore Community Transport Inc T/A Community Connect Transport Services
(AG2017/2800)

LNSCT EMPLOYEE COLLECTIVE AGREEMENT 2009

Health and welfare services
COMMISSIONER JOHNS	CANBERRA, 25 OCTOBER 2017

Application for termination of the LNSCT Employee Collective Agreement 2009.

[1] This decision concerns an application by Lower North Shore Community Transport Inc T/A Community Connect Transport Services (Applicant/Employer) under section 225 of the Fair Work Act 2009 (FW Act) to terminate the LNSCT Employee Collective Agreement 2009 (2009 Agreement).

[2] The nominal expiry date of the 2009 Agreement is unknown as correspondence confirming date of lodgement cannot be found. However, since the 2009 Agreement is from 2009 and Clause 4 states the nominal expiry date shall take effect 3 years from lodgement, it is clear the nominal expiry date has passed.

[3] The Applicant wishes to terminate the 2009 Agreement because it no longer reflects the funding structures the Applicant relies on from the NSW Government. The Applicant submitted that if the 2009 Agreement was terminated, its employees would be covered under the Social, Community, Home Care and Disability Services Award 2010 (the Award).

[4] At the hearing on 30 August 2017, the Applicant was granted permission to be represented by Athena Koelmeyer 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. 1 Employees Westgarth, N, Rutter, and Scarr, T were present representing themselves.

Background

[5] On 12 July 2017, the Employer lodged an application for the termination of an enterprise agreement after the nominal expiry date (Form F24B). Accompanying this was a statutory declaration in relation to termination of an enterprise agreement after the nominal expiry date (Form F24C).

[6] On 27 July 2017, employees Anthony Durant, Steve Kane, Barry Rutter each lodged an objection to this application.

[7] On 29 July 2017, employees Tim Scarr, Phillip Delaney, Corinne Sellers each lodged an objection to this application.

[8] On 2 August 2017, employees Nigel Westgarth, Terry Slack, Steve Kane, Philip Delaney, Corinne Sellers, Michelle Blyme, Mark Waters, Marco Kahya, Andrew Fleming, Terry Forman, Tim Scarr, Glen Ford, Tony Durant lodged a joint objection to this application.

[9] The matter was subsequently listed for Hearing on 10 August 2017.

Submissions

Employer’s Initial Application

[10] The Applicant submitted in their Form F24C that the 2009 Agreement is no longer consistent with funding arrangements between the Applicant and Transport NSW. Additionally, these same funding arrangements make reference to the Award. The Applicant submitted that under the Award the employees would be entitled to more advantageous conditions including casual loading, double time on Sundays and first aid allowance.

[11] The Applicant submitted in the same submission that its employees would have a lower wage under the Award, but would provide an undertaking which would preserve their current rate of pay.

Employee’s Submissions

[12] On 11 August 1017, Barry Rutter made a submission which disputed that the Award would cover the workplace given the substantive work performed. He argued that since the employees covered by the 2009 Agreement primarily did transport related work, the Award would not be appropriate. In addition, he argued that Transport NSW was putting external pressure on the Employer and that did not constitute a valid reason to change industrial coverage. In addition he argued that new staff would not be covered by the undertaking mentioned by the Employer, meaning they would be employed under the new, lower rates under the Award. He also expressed discontent in regards to a lack of future CPI increases and the general viability of the Applicant.

[13] On 12 August 2017, Tony Durant made a submission which expressed discontent over the lower rates under the Award, “Grandfathering” of existing staff’s wages, a perceived risk of loss of employment and the effect the changes would have on the “spirit and culture of Community Connect”.

[14] On 13 August 2017, Phillip Delaney made a submission that he endorses Barry Rutter’s submission (Above at [12]).

[15] On 15 August 2017, Corinne Sellers made a submission that she opposed the application due to it being unfair, the lack of future pay increases and that it shows that the employees are not valued.

[16] On 16 August 2017, David Mallyon made a submission endorsing Barry Rutter’s submission (Above at [12]).

[17] On 16 August 2017, Steve Kane made a submission that the Award would result in drivers being worse off overall than the 2009 Agreement.

[18] On 17 August 2017, Mal Young made a submission that there had been no consultation with staff about how the Award would affect industrial conditions, a lack of transparency in regards to pay scaling, and whether current positions would remain.

[19] On 18 August 2017 Tim Scarr made a submission stating that the change would result in an overall wage reduction and job uncertainty.

[20] On 19 August 2017, Terry Forman made a submission expressing concern that the change was not brought before management staff prior to being initiated, and a general lack of procedural fairness throughout the process.

[21] On 21 August 2017, Terry Payne made a submission expressing concern over the new pay rates under the Award.

Applicant’s Submissions

[22] On 28 August 2015, the Applicant submitted, summarised below,

Reasons for proposed termination of the agreement

a) The funding arrangement between the Applicant and Transport NSW directly references the Award. The Applicant states that this shows an expectation that the Award be used as the primary industrial instrument.

b) There are multiple terms the 2009 Agreement that have been made inoperative to the current funding arrangement.

c) The casual loading in the 2009 Agreement is lower than that under the Award.

Award coverage

d) The services the Applicant provides fall within the definition of “social and community services sector” in the Award and provides classifications for all roles contained in the Agreement.

Steps taken to mitigate any adverse impact on current employees

e) In order to mitigate the lower pay rate under the Award, the Applicant offers to provide undertakings to preserve current rates of pay.

Matters to be considered by the Fair Work Commission

f) In relation to the public interest criterion, citing Re Kellogg Brown and Root, Bass Strait (Esso) Onshore/Offshore Facilities Certified Agreement 2000 (2005) 139 IR 34 at [41] that it is not contrary to the public interest for the 2009 Agreement to be terminated for the reasons outlined above.

Consultation with employees

g) The Applicant has genuinely sought consultation with staff about this change.

Responses to issues raised by employees

h) The Applicant denies telling employees that they were overpaid under the 2009 Agreement.

i) The Award is the correct award due to the funding being intrinsically linked to the delivery of services in the social and community sector.

j) The claim that more work would be given to new employees paid under the Award is speculative and that the Applicant would make undertakings which would ensure existing employees are not disadvantaged.

k) In relation to the claim that some employees are still confused about award coverage, that the Applicant has made all possible efforts.

l) In relation to the claim that there will be no further CPI pay increases, that the CPI increases in the 2009 Agreement are currently inoperative, and as such would not apply even if the 2009 Agreement is not terminated.

m) In relation to the claim that the termination of the 2009 Agreement will result in overall wage reduction over time, that undertakings will be made to preserve current wages for existing staff.

n) In relation to the claim that the termination of the 2009 Agreement will result in job uncertainty, that this objection is speculative.

o) In relation to the claim that the termination of the 2009 Agreement is unfair, that no existing employee will be disadvantaged, and any new employee will be protected by existing industrial safety nets set by the Commission.

p) In relation to the claim that the Management Committee does not have a valid reason for terminating the 2009 Agreement, the Applicant reiterated the reasons set out above in [22](a)-(c).

q) In relation to the claim that the termination of the 2009 Agreement will erode standards, that this claim is speculative.

r) In relation to the claim that the process thus far has been procedurally unfair, that the Applicant denies these allegations and that a thorough consultative process was followed.

s) That the Executive Officer’s remuneration is not a relevant matter to consideration to these proceedings.

t) In relation to the claim that the wages of employees should not be influenced by government funding agreements, that the Applicant solely relies on such funding and thus the claim fails to account for the fiscal context of the operation.

[23] At the hearing on 30 August 2017, the Applicant stated that they would redraft undertakings to the effect of addressing the employee’s concerns about the security of their employment. 2

Undertakings Made

[24] On 10 October the following undertakings were signed by David Goodenough, President of the Applicant’s Management Committee,

“In support of s226 of the FW Act, LNSCT provides the following undertakings:

1. The Social, Community and Disability Services Industry Equal Remuneration Order 2012 for the Award (ERO) will apply to all LNSCT employees previously covered by the Agreement. LNSCT acknowledges that the ERO incrementally increases until 2020 and confirms that all ERO increases will be passed on to employees covered by the Award.

2. The ordinary rates of pay payable to the Casual Drivers employed by LNSCT under the ERO will be Level 2, Pay Point 3 - $31.90 (gross) per hour (at the date of this Undertaking) including ERO Transitional Equal Remuneration Payment and 25% casual loading.

3. The ordinary rates of pay for the Casual Drivers will be subject to all future increases as prescribed by the ERO.

4. The ordinary rate of pay payable to the Permanent Part-Time Driver under the ERO will be Level 3, Pay Point 3 $29.28 (gross) per hour and subject to all future increases as prescribed by the ERO.

5. From the date of the termination of the Agreement, LNSCT will pay the cost of the annual First Aid course for all Drivers employed by LNSCT at the time the Agreement is terminated.

6. The ordinary rate of pay payable to the Full-Time Transport Coordinator under the ERO will be Level 3, Pay Point 4 $30.47 (gross) per hour and subject to all future increases as prescribed by the ERO.

7. The ordinary rate of pay payable to the Full-Time Transport Services Manager under the ERO will be Level 8, Pay Point 3 $46.26 (gross) per hour and subject to all future increases as prescribed by the ERO.

8. The “Hours” provisions contained in clause 14 of the Agreement will be maintained for all employees employed by LNSCT at the time the Agreement is terminated.

9. The “Christmas Close Down” provisions contained in clause 23 of the Agreement will be maintained for all employees employed by LNSCT at the time the Agreement is terminated.

10. The Salary packaging provisions contained in clause 33 of the Agreement will be maintained for all employees employed by LNSCT at the time the Agreement is terminated subject to statutory obligations permitting such salary packaging continuing.

11. The Superannuation provisions contained in clause 34 of the Agreement will be maintained for all employees employed by LNSCT at the time the Agreement is terminated subject to any statutory obligations.”

[25] As a result of these undertakings, the parties agreed that the termination of the 2009 Agreement should go ahead and that the matter may be dealt with on the papers.

Legislative scheme

[26] 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.”

Consideration

Is termination of the Agreement contrary to the public interest?

[27] In Energy Resources of Australia Ltd v LHMU 3 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)

[28] The Commission, as presently constituted, is satisfied that as a result of the undertakings above in [24], the termination of the 2009 Agreement would not be contrary to the public interest.

Is termination of the Agreement appropriate in the circumstances?

Views of the parties s.226(b)(i)

[29] Subsequent to the undertakings above in [24], all relevant parties to this are of the view that the termination of the 2009 Agreement should go ahead.

The circumstances of those employees, employers and organisations including the likely effect that the termination will have on each of them s.226(b)(ii)

[30] Given the undertakings above in [24], the Commission as it is presently constituted is satisfied that the negative effects raised by the employees above have been addressed. Furthermore, the termination of the 2009 Agreement will allow for funding arrangements to align in conjunction with the Award.

[31] Having considered all of the views and circumstances, the evidence and the submissions made by the employees and the Applicant, the Commission, as presently constituted, is satisfied that it is appropriate to terminate the 2009 Agreement.

Conclusion

[32] The Commission, as presently constituted, having considered and being satisfied as to each of the matters contained in s.226 of the FW Act, the 2009 Agreement is terminated with effect from today.

Appearances:

A Koelmeyer for the Applicant.

B Rutter, N Westgarth, and T Scarr as Respondents

Hearing details:

2017

30 August

Sydney

COMMISSIONER

 1   Transcript PN68.

 2   Transcript PN378.

 3   [2010] FWA 2434.

Printed by authority of the Commonwealth Government Printer

<Price code C, AC324868, PR596688>