Margaret River Chocolate Company Pty Ltd
[2022] FWCA 1013
•4 April 2022
| [2022] FWCA 1013 |
| 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
Margaret River Chocolate Company Pty Ltd
(AG2022/799)
The Margaret River Chocolate Company Pty Ltd Employee Collective Agreement 2008
| Food, beverages and tobacco manufacturing industry | |
| DEPUTY PRESIDENT BEAUMONT | PERTH, 4 April 2022 |
Application for termination of the Margaret River Chocolate Company Pty Ltd Employee Collective Agreement 2008
On 18 March 2022, the Margaret River Chocolate Company Pty Ltd (Applicant) applied under Schedule 3, Item 16 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) (the Transitional Act) to terminate the Margaret River Chocolate Company Pty Ltd Employee Collective Agreement 2008 (Agreement).[1]
The Applicant explained that the Agreement is now nine years beyond its nominal expiry date and that the rates of pay under the Agreement do not reflect the rates of pay in the relevant modern award. The Applicant expressed that whilst it would incur an additional wage cost, it accepted that the Agreement had run its course and needed to be more in line with contemporary wage arrangements.
Because the Agreement is a collective agreement-based transitional instrument, Item 16 of Schedule 3 of the Transitional Act applies. The effect of Item 16 is that the termination of agreement provisions found in Subdivision D of Division 7 of the Fair Work Act 2009 (Cth) (the Act) applies to the Agreement as if a reference to an enterprise agreement included a reference to a collective agreement-based transitional instrument. The relevant termination provisions are set out below:
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.
For the reasons that follow, I am satisfied that the termination of the Agreement is not contrary to the public interest, and in the circumstances of this case, it is appropriate to terminate the Agreement.
Consideration
Mr Martin Black (Mr Black), a Director of the Applicant, gave evidence that the Agreement currently does not provide for weekend or public holiday penalty rates, and sets the casual loading for the employees at 20%. Mr Black further explained that the views of employees covered by the Agreement were sought, with staff participating in a ballot regarding their views on the termination of the Agreement. The evidence showed that 31 staff voted in the ballot and all that voted, voted in favour to terminate the Agreement.
I am satisfied the requirements of s 225 of the Act are met. The Agreement has passed its nominal expiry date, and pursuant to s 225(a) of the Act, Mr Black declared the Applicant is the employer covered by the Agreement. As such, the Applicant has standing to bring the Application under s 225(a) of the Act.
Attention first turns to whether I am satisfied that termination of the Agreement is ‘not contrary to the public interest’.
The ‘public interest’ refers to matters that might affect the public as a whole, such as the achievement or otherwise of the object of the Act, employment levels, inflation, and the maintenance of proper industrial standards.[2] It is distinct in nature from the interests of the parties, though those interests may be simultaneously affected.[3]
The object of the Act, as set out in s 3, is to provide a balanced framework for cooperative and productive workplace relations that promotes national economic prosperity and social inclusion for all Australians. The object is to be achieved, among other things, by ensuring a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions, and by achieving productivity and fairness through an emphasis on enterprise-level collective bargaining. Section 578 of the Act requires that in performing functions or exercising powers, the Commission must take this object into account.
It is also relevant to highlight that the Full Bench in Aurizon Operations Limited; Aurizon Network Pty Ltd; Australian Eastern Railroad Pty Ltd (Aurizon) concluded that it cannot be expected that the terms and conditions of an agreement will continue unaltered in perpetuity after it has passed its expiry date.[4] This is because the Act contemplates the terms and conditions of an agreement may be altered by making a new agreement or by terminating the existing agreement.
If the Agreement was terminated and the Applicant engaged new employees, those future employees would be covered by the Award, as will the existing ones. On this basis, the termination of the Agreement would not adversely affect the public interest in so far as the maintenance of proper industrial standards was concerned.
The Applicant contended that the foreseeable consequences of the termination are: (a) employees will be entitled to higher rates of pay; and (b) employees will be entitled to weekend and public holiday penalty rates.
Based on the material contained in the declaration of the Applicant filed with the application and additional materials filed, I am satisfied that the termination of the Agreement is not contrary to the public interest.
Section 226(b) of the Act – Appropriateness
The approach to assessing ‘appropriateness’ in the context of ss 226(b)(i) and (ii) of the Act was detailed by the Full Bench in Aurizon. It said:
[A]ll of the circumstances also need to be taken into account in considering whether termination of the agreements is appropriate. In particular the views of employers and employees covered by the agreement, their circumstances, and the impact of termination need to be taken into account. The requirement in s. 226(b) to take into account all of the circumstances including those set out in s. 226(b)(i) and (ii) is a requirement to take the matters into account and to give them due weight in assessing whether it is appropriate to terminate an enterprise agreement. In assessing appropriateness by taking into account all of the circumstances, we approached the task by reference to the construction of s. 226 and the contextual matters that bear upon that construction dealt with earlier as well as giving specific consideration to the matters identified in s. 226(b)(i) and (ii).[5]
I intend to adopt this approach.
The Applicant has undertaken a consultative process with its employees regarding the proposed termination and the effect that it would have on them. Those same employees have demonstrated support for the termination through a unanimous vote to terminate, albeit some employees did not vote. No employee organisation is covered by the Agreement.
Considering all of the circumstances including the requirements in ss 226(b)(i) and (ii) of the Act, it is appropriate to terminate the Agreement.
Conclusion
An Order[6] will be issued terminating the Agreement with effect on 4 April 2022.
DEPUTY PRESIDENT
[1] AC316207.
[2] Re Aurizon Operations Limited[2015] FWCFB 540 [129] (Aurizon).
[3] Re Kellogg Brown and Root Bass Strait (Esso) Onshore/Offshore Facilities Certified Agreement 2004 PR955357 [23].
[4] Aurizon (n 2) [176].
[5] Ibid [167].
[6] PR739560.
Printed by authority of the Commonwealth Government Printer
<AC316207 PR739559>
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