Manildra Meat Company Pty Ltd T/A Manildra Meat

[2019] FWCA 2321

[2019] FWCA 2321

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.225—Enterprise agreement

Manildra Meat Company Pty Ltd T/A Manildra Meat
(AG2018/7296)

G M SCOTT PTY LTD ENTERPRISE AGREEMENT 2012

Meat Industry
SENIOR DEPUTY PRESIDENT HAMBERGER	SYDNEY, 10 APRIL 2019

Application for termination of the G M Scott Pty Ltd Enterprise Agreement 2012

[1] Manildra Meat Company Pty Ltd T/A Manildra Meat (the applicant) on 21 December 2018 made an application under s.225 of the Fair Work Act 2009 (the FW Act) to terminate the G M Scott Pty Ltd Enterprise Agreement 2012 (the agreement).

[2] The Australasian Meat Industry Employees Union (AMIEU) indicated on 4 February 2019 that it objected to the application to terminate the agreement.

[3] The parties made written submissions and a hearing was held in Sydney on 26 March 2019. The applicant was represented by A Willits (solicitor) and the AMIEU by J Schultz.

[4] Evidence was presented on behalf of the applicant by John Chilcott (Group Manager, Human Resources and Safety). Mr Chilcott was not cross examined on his evidence by Mr Schultz, though I asked him a few questions.

The evidence

[5] The business covered by the agreement, which is located in Cootamundra NSW, was purchased from G M Scott Pty Ltd in July 2014 as a going concern by the Manildra group. Subsequent to the purchase of the business the name of G M Scott Pty Ltd was changed to that of the applicant, although it remained the same corporate entity.

[6] When the business was purchased in July 2014 it operated as an abattoir.

[7] The abattoir ceased operations on 27 February 2017 due to a number of financial factors including the high purchase cost of animals for processing which made the business unprofitable, and the loss of a major contract with Woolworths Limited that was worth approximately 60 per cent of the throughput of the abattoir.

[8] After a failed search for replacement export markets the abattoir ceased operation, leading to 230 workers being made redundant.

[9] Since the site was ‘mothballed’ a number of options have been considered for the use of the site. No determination has yet been made for the use of the site as this will be a matter for the prospective purchaser but a definite decision has been made to sell the site. The applicant has no plan to reopen the abattoir.

[10] There are a number of entities who are interested in purchasing the site, though it is unclear whether they would operate the site as an abattoir 1.

[11] Failure to terminate the agreement could affect the ability of the applicant to sell the site.

[12] The applicant currently conducts a small amount of ‘rendering’ work to process left-over by-products into dry fertiliser and tallow though this operation is under review as to its viability. The applicant does not make a profit from the rendering operation. The rendering operation only makes a very small contribution to cover the cost of the applicant’s site and the applicant’s site continues to operate at a loss.

[13] There are seven employees, one full-time and six casual, who perform work at the site covered by the agreement. They are all currently paid rates significantly in excess of the rates contained in the agreement.

[14] The applicant has provided an undertaking that if the agreement was terminated it would to continue to pay the workers in question at least their current rates of pay.

Consideration

[15] Subdivision D of Division 7 of Part 2-4 of the FW Act deals with the termination of enterprise agreements after their nominal expiry date. It provides 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 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.’

[16] The agreement was made around seven years ago and its nominal term expired over three and a half years ago. The agreement is significantly out of date. This is illustrated by, if nothing else, the fact that the employees currently employed by the applicant who are covered by the agreement, are paid at least 20 per cent more than the rates in the agreement.

[17] The AMIEU submitted that there are a number of conditions in the agreement that are more beneficial than those in the Meat Industry Award 2010 (the modern award). However most of the conditions identified by the AMIEU are either of marginal significance or turn out not to be more beneficial.

[18] For example, Mr Schultz pointed to the rather anachronistic provision in the agreement that provides for a three month probation period ‘during which time employment may be terminated without notice.’ However this provision is unlikely to have any effect as notice is determined by the provisions of the FW Act, which also provides for a six month qualifying period for unfair dismissal.

[19] Mr Schultz also pointed to the meal break provision in the agreement and claimed that the agreement was superior to the award as unlike the latter it prescribes when a meal break is to be taken. In fact, on examination, there is very little difference between the meal break provision in the modern award and that in the agreement – both broadly provide for a minimum meal break of thirty minutes within five hours unless otherwise agreed.

[20] Mr Schultz also pointed to the redundancy pay provisions in the agreement as less generous than those in the modern award. However the modern award simply adopts the redundancy pay provisions in the NES – and these are the same as in the agreement.

Overall, I am satisfied that the provisions of the agreement are not more advantageous to employees than the modern award – which is perhaps not surprising given the age of the agreement.

[21] I do not consider it would be contrary to the public interest to terminate the agreement. The AMIEU referred to the case of Wollongong Coal 2in which the Commission found it would be contrary to the public interest to terminate an enterprise agreement in circumstances where the applicant had failed to try and resolve its concerns about the agreement by negotiation. However the circumstances in this case are very different. In Wollongong Coal the employer was planning to reopen the business in a matter of months and had had no discussions with the relevant union about what form a new enterprise agreement could take. Here the applicant has no intention of re-opening the abattoir and has decided to sell the site.

[22] I am satisfied that the termination of the agreement will not have any significant negative effects on the employees whom it covers. There is no direct evidence concerning the views of those employees. There is uncontested evidence from Mr Chilcott that the agreement is a potential impediment to the sale of the applicant’s site. 3

[23] The agreement was entered into by the previous owner of the business under very different business conditions. The current owner now plans to sell the site. A new owner should be free to buy the site and, if it so wishes, reopen it as an abattoir, without being constrained by the terms of the agreement.

[24] I am satisfied that the termination of the agreement is appropriate having regard to all the factors contained in s.226 of the FW Act.

[25] I order that the agreement be terminated on 17 April 2019.

SENIOR DEPUTY PRESIDENT

 1  PN72

 2   Wollongong Coal Limited T/A Wollongong Coal re NRE No 1 Colliery Workplace Agreement 2011[2019] FWCA 216

 3   Exhibit 1 at [24]

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