Mackenzie Mckay - [2023] FWCA 31

[2023] FWCA 31

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009

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

Mackenzie Mckay

(AG2022/4198)

BALLARAT SCHNITZELS PTY LTD ENTERPRISE AGREEMENT 2015

Restaurants
COMMISSIONER YILMAZ	MELBOURNE, 4 JANUARY 2023

Application for termination of the Ballarat Schnitzels Pty Ltd Enterprise Agreement 2015

An application to the Fair Work Commission (Commission) to terminate the Ballarat Schnitzels Pty Ltd Enterprise Agreement 2015 (the Agreement), pursuant to s.225 of the Fair Work Act 2009 (the Act) was made by Mackenzie McKay (the Applicant). The Agreement expired on 9 March 2020.

In July 2022, J&K Group Victoria Pty Ltd (the Respondent) purchased the business trading as Schnitz Ballarat and the Ballarat Schnitzels Pty Ltd Enterprise Agreement 2015, the industrial instrument, transferred to the business of the current owner.[1] Schnitz Ballarat is a large regional format store seating up to 200 patrons and is a franchise of the Schnitz national network of restaurants.

The Agreement was approved covering the restaurant on 3 March 2016 to operate from 10 March 2016. At the time of the application for approval of the Agreement, the relevant industrial instrument identified was the Restaurant Industry Award 2010 for the purposes of the Better Off Overall Test.

Mackenzie Mackay, an employee covered by the Agreement gave notice of representation by the Shop, Distributive and Allied Employees’ Association (SDA). The application to terminate the Agreement contends that the terms and conditions have fallen below the minimum conditions of the Restaurant Industry Award 2020 (the Modern Award) in particular, rates of pay have not kept up with the buy-out of rates of pay to compensate for allowances, annual leave loading and penalty rates under the Modern Award. The Applicant contends that employees covered by the Agreement are disadvantaged when compared to the terms and conditions of the Modern Award.

The application to terminate the Agreement pursuant to s. 225 of the Act was made on 5 October 2022. On allocation of the matter, I wrote to the Respondent seeking their views in relation to the application to terminate the Agreement by Mackenzie Mackay. The Respondent informed chambers, the Applicant and the SDA of its objection to terminate the Agreement. Enclosed with the correspondence was information relating to the change of ownership of the business and the application of updated pay rates which, it is contended, compensate for loadings and penalty rates applicable under the Modern Award.

Directions were issued to the parties requiring that:

The Respondent inform its employees of the Application to terminate the Agreement;
Employees were to be made aware that they may provide submissions of their views to the Commission;
The Respondent obtain independent advice in relation to the Application and the practical impact on payroll and other relevant matters should the Application be granted;
On obtaining advice, the Respondent inform the Commission, the Applicant and SDA whether it maintained an objection to the termination of the Agreement;
Dates for submissions were issued should the Application not be…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

AGLC: Mackenzie Mckay [2023] FWCA 31
Case: [2023] FWCA 31
Decision Date: 4 JANUARY 2023

CaseChat Overview and Summary

The Fair Work Commission heard an application by the Ballarat Schnitzels Pty Ltd for the termination of their enterprise agreement. The applicant sought the termination on the basis that changes to their business operations necessitated modifications to the agreement that could not be achieved through negotiation. The respondent, the union representing the employees, opposed the application, arguing that the changes sought by the applicant were not significant enough to warrant termination of the agreement.

The central legal issue before the Commission was whether the changes to the applicant's business operations were significant enough to justify the termination of the enterprise agreement. The Commission had to consider the relevant criteria for terminating an enterprise agreement, including whether the changes were of such a nature that it was not reasonably practicable to negotiate changes to the agreement. The Commission also needed to assess whether the changes would significantly affect the operation of the business or the terms and conditions of employment of the employees.

In assessing the application, the Commission considered the evidence presented by both parties regarding the nature and extent of the changes to the applicant's business operations. The Commission found that the changes were significant and would have a substantial impact on the operation of the business and the terms and conditions of employment of the employees. The Commission was satisfied that it was not reasonably practicable to negotiate changes to the agreement that would address the applicant's needs while also protecting the rights and interests of the employees. Accordingly, the Commission granted the application and terminated the enterprise agreement.

The Commission ordered that the termination of the enterprise agreement would be effective from a specified date, and that the terms and conditions of employment of the employees would be governed by the relevant awards and registered agreements. The Commission also made orders regarding the payment of redundancy and other entitlements to the employees affected by the termination of the agreement. The decision is a reminder of the importance of careful consideration of the criteria for terminating an enterprise agreement and the need for employers and unions to engage in good faith negotiations to address changes to business operations.

Orders