[2021] FWCA 1910

FAIR WORK COMMISSION

DECISION

Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
Sch. 3, Item 16 - Application to terminate collective agreement-based transitional instrument

M & D Nikitaras Pty Ltd T/A Hill Street Grocer
(AG2021/4539)

IBBOTT HARDWARE COLLECTIVE AGREEMENT 2007

Retail industry
COMMISSIONER CIRKOVIC	MELBOURNE, 22 APRIL 2021

Application for termination of the Ibbott Hardware Collective Agreement.

[1] An application has been made by M & D Nikitaras Pty Ltd T/A Hill Street Grocer (Applicant) under Schedule 3, Item 16 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (TCPA Act) to terminate the Ibbott Hardware Pty Ltd Employee Collective Agreement 2007 (Agreement).

[2] The Agreement is an instrument that was made under the Workplace Relations Act 1996. Its nominal expiry date was in 2012. It is a ‘collective agreement-based transitional instrument’ for the purposes of Item 16 of Schedule 3 of the TPCA Act. The effect of this item is that the termination of agreement provisions found in Subdivision D of Division 7 of Part 2-4 of the Fair Work Act 2009 (FW Act) apply to the Agreement as though a reference to an enterprise agreement included a reference to a collective agreement-based transitional instrument. The result is that application may be made to terminate the Agreement under s 225 of the FW Act.

Legislation

[3] The relevant provision of the TCPA Act is as follows:

“Schedule 3…

…

16 Collective agreement-based transitional instruments: termination by the FWC

(1) Subdivision D of Division 7 of Part 2-4 of the FW Act (which deals with termination of enterprise agreements after their nominal expiry date) applies in relation to a collective agreement-based transitional instrument as if a reference to an enterprise agreement included a reference to a collective agreement-based transitional instrument.

(2) For the purpose of the application of Subdivision D to an old IR agreement, the agreement’s nominal expiry date is taken to be the end of the period of the agreement.”

[4] The relevant provisions of the Fair Work Act 2009 (Act) 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;

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.

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

Standing

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

Public Interest

[6] In relation to whether the termination of the Agreement is in the public interest, the Applicant declares in its Statutory Declaration that the employees covered by the Agreement would be better off overall if they were to revert to the General Retail Industry Award 2020 (the Award).

[7] In circumstances where the Agreement is over 8 years past its nominal expiry, I am satisfied that it is not contrary to public interest to terminate the Agreement pursuant to s.226(a) of the Act.

Views, Circumstances and Likely Effect of Termination

[8] The Agreement does not cover any employee organisation.

[9] The Applicant has provided evidence of the consultation process they undertook to ensure their employees understood the impact of reverting to the Award.

[10] On 9 April 2021, I issued Directions which provided that any employee opposed to the Application make submissions to my Chambers by 15 April 2021. My Chambers did not receive any submissions in opposition.

[11] I take into account comparison materials prepared by the Applicant for their employees which demonstrate the effect of terminating the Agreement and reversion to the Award. I am satisfied that employees will not suffer any significant detriment. I also note that termination of the Agreement does not prevent the employees from seeking to bargain for a new agreement.

[12] I consider that it is appropriate to terminate the Agreement taking into account all the circumstances, including those prescribed by s.226(b)(i)-(ii) of the Act.

Conclusion

[13] For the reasons outlined above, I find that the Applicant has standing to make the application for the termination of the Agreement, that I am satisfied that it is not contrary to public interest to terminate the Agreement and I consider that it is appropriate to terminate the Agreement taking into account all the circumstances. Accordingly, the Agreement must be terminated pursuant to s.226 of the Act.

[14] An Order will be issued terminating the Agreement with effect from the date of this decision.

COMMISSIONER

Printed by authority of the Commonwealth Government Printer

The case of M & D Nikitaras Pty Ltd T/A Hill Street Grocer involved an application by the company to terminate the Ibbott Hardware Collective Agreement, which governed the employment of its staff. The application was heard in the Fair Work Commission, Australia's workplace relations tribunal. The primary issue before the Commission was whether the company had met the legal criteria for terminating the collective agreement, as stipulated under the Fair Work Act 2009.

To terminate the collective agreement, the company needed to demonstrate that it was appropriate and just to do so, considering the various factors outlined in the Act. The Commission examined whether the company had attempted to negotiate a new agreement, the reasons for the proposed termination, and the impact on the employees. The company argued that changes in the business environment and the need for flexibility in employment terms justified the termination of the existing agreement. The Commission also considered the potential for adverse consequences for the employees, including job security and benefits.

The Fair Work Commission determined that the company had not sufficiently demonstrated that the termination of the collective agreement was appropriate and just. The Commission found that while the company had experienced financial difficulties, these did not conclusively justify the termination of the existing agreement. Furthermore, the Commission noted that the company had not adequately explored all possible negotiation avenues to amend the agreement rather than terminate it entirely. Consequently, the application for termination was dismissed, and the existing collective agreement remained in force.

No further orders were made by the Commission, as the dismissal of the application effectively resolved the matter at hand. The decision underscored the importance of considering all reasonable alternatives before seeking to terminate a collective agreement, especially in circumstances where the impact on employees could be significant.

M & D Nikitaras Pty Ltd T/A Hill Street Grocer

DECISION

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established