Morris Construction Corporation Pty Ltd

[2020] FWC 659

[2020] FWC 659

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.225—Enterprise agreement

Morris Construction Corporation Pty Ltd
(AG2019/3050)

Building, metal and civil construction industries
DEPUTY PRESIDENT CROSS	SYDNEY, 12 FEBRUARY 2020

Application for termination of the Morris Construction Corporation Pty Limited and CFMEU ACT Enterprise Agreement 2016.

[1] On 19 August 2019, Morris Construction Corporation Pty Ltd (the Applicant) filed an application with the Fair Work Commission (the Commission) for the termination of the Morris Constructions Corporation Pty Limited and CFMEU ACT Enterprise Agreement 2016 (the Agreement) after its nominal expiry date, being 1 March 2019, pursuant to s.225 of the Fair Work Act 2009 (Cth) (the Act) (the Application).

[2] The Application was supported by two documents:

(a) a Form 24B – Application for the termination of an enterprise agreement, signed by Mr Barry Morris, Director of the Applicant, dated 19 August 2019 (the Form 24B); and

(b) a Form 24C – Statutory declaration in relation to termination of an enterprise agreement, made by Mr Morris on 19 August 2019 (the Form 24C).

[3] On 19 September 2019 the Construction, Forestry, Maritime, Mining and Energy Union (the CFMMEU) filed submissions opposing the Application (the CFMMEU Submission), and the Applicant filed Submissions in Reply on 10 October 2019 (the Applicant’s Submission).

[4] On 15 October 2019, I issued the following Directions in the matter:

“1. On 19 August 2019, an application was made by Morris Construction Corporation Pty Ltd (the Applicant) to terminate the Morris Construction Corporation Pty Limited and CFMEU ACT Enterprise Agreement 2016 after its nominal expiry date of 1 May 2019.

2. Pursuant to ss.226(b)(i) and 226(b)(ii) of the Fair Work Act 2009 (Cth), if an application for termination of an enterprise agreement after its nominal expiry date is made under s.225 of the Act, the Commission must take into account:

(i) the view of the employees who would be affected by the orders, and;

(ii) the circumstances of those employees, including the likely effect that the termination

will have on each of them.

3. As such, the Commission invites any of the five employees who would be affected by the orders for any views they may wish to express.

4. The Applicant is required to make available to the five affected employees a copy of these Directions, by email.

5. Those five employees who would be affected by the orders are required to acknowledge receipt of the Directions, by return email to the Applicant.

6. The Applicant is required to provide copies of each of the acknowledgements from the affected employees to the Commission by no later than 4.00pm on Tuesday 5 November 2019.

7. The views, if any, of employees who would be affected by the orders are required to be provided in writing to my Chambers, via e-mail, on [email protected] by no later than 4.00pm on Wednesday 6 November 2019.”

(original text retained, style amended slightly)

[5] On 5 November 2019, the Applicant advised the Commission, and it seemed to be accepted by the CFMMEU, that in fact only four employees would be affected by the orders.

The views of the employees

[6] Three of the four employees affected by the order sought expressed their views. Those employees, and their views, were as follows:

(a) On 6 November 2019, at 12.37pm, my Chambers received an email from Mr Joe Plint, in the following terms:

“My name is Joe Plint I work for Morris Property. They are currently in the process of terminating our EBA. I am concerned about this as it is going to cause hardship and really impact my lifestyle. My partner and I rely on this income to prepare for our retirement. Without the EBA I am concerned my income will be reduced to the award and I am going to be left with bills I cannot pay.

I’ve got very little super as it was used for compo in the past, I am concerned about where this will leave me in my retirement. I’d ask the commission to stop this going through so we can keep our current EBA.”

(b) On 6 November 2019, at 3.17pm, my Chambers received an email from Mr Michael Cousins and, apparently, Mr Allen Girvan, in the following terms:

“I, Michael Cousins & Work colleague, Allen Girvan have no disputes in the cancellation of the current enterprise agreement on the condition that it doesn’t in any way affect our current wages & work conditions or any future EBA negotiations!”

[7] After receipt of the above views a directions hearing occurred on 29 November 2019, at which both the Applicant and the CFMMEU were directed to file and serve their Submissions by 6 December 2019. Those further submissions were to be particularly directed to the issues of:

(a) the Applicant’s interest in compliance with the Building Code 2016 (the Building Code);

(b) the responses of the affected employees to the proposed termination; and

(c) the current state of bargaining for a new agreement.

Submissions

[8] It transpired that the following documents were filed by the parties:

(a) On 6 December 2019, the Applicant filed:

(i) a letter from Mr Barry Morris to the Commission dated 6 December 2019;

(ii) a letter from Mr James Morris, the sole Director of MPG Constructions Canberra Pty Limited (MPGCC), containing undertakings; and

(iii) the Applicant’s Further Submissions dated 6 December 2019 (the Applicant’s Further Submission).

(b) On 6 December 2019, the CFMMEU filed an Outline of Submissions of that same date (the CFMMEU Further Submission), together with three “business records”.

(c) On 17 December 2019, the CFMMEU filed a further Submission (the CFMMEU Supplementary Submission).

(d) On 19 December 2019, the Applicant filed a further Submission (the Applicant’s Supplementary Submission).

The proposed undertaking/s

[9] Quite clearly there have been an unusually large number of submissions in this matter, however, that has allowed a refinement of issues, particularly through the prism of proposed undertakings.

[10] As noted above, on 6 December 2019, Mr James Morris, the sole Director of MPGCC, proposed an undertaking in the following terms:

“7. In order to allay the Employee’s concerns and in response to the issues raised at the Mention, MPGCC hereby undertakes:

i. not to reduce the Employees’ income to the Award;

ii. to continue paying the Employee’s current wages; and

iii. to maintain the Employees’ current working conditions,

while MPGCC and the Employees continue good faith bargaining for a new agreement.” (original emphasis)

[11] The relationship between the Applicant and MPGCC is unclear, though I note that the correspondence from each entity on 6 December 2019, is on “Morris Property Group” letterhead. I further note that the CFMMEU does not take issue with an undertaking being proffered by an entity other than the Applicant.

[12] The CFMMEU, while characterising the provision of an undertaking as “an undoubtedly positive step” 1, has submitted that the undertaking offered is unreasonably vague and limited. The CFMMEU submits that the undertaking should be in the following form:

“MPGCC hereby undertakes:

i. not to reduce or modify the Employees’ income, wages, entitlements or conditions of service except by written agreement with the individual worker; and

ii. to maintain the working conditions set out in the enterprise agreement including, but not limited to hours of work, classifications, consultation, disputes and delegates’ rights, disciplinary and performance matters, work health and safety, and termination/redundancy;

until such time as a new enterprise agreement covering the affected workers comes into force.”

[13] The Applicant, in response, has proposed an amendment to the undertaking suggested by the CFMMEU, which it expressed in “mark-up” form as follows:

“MPGCC hereby undertakes:

i. not to reduce or modify the Employees’ income, wages or entitlements to the Award except by written agreement with the individual worker; and

ii. to continue paying the Employee’s current wages; and

iii. to maintain the Employees’ current working conditions set out in the enterprise agreement (subject to those conditions complying with the Building Code 2016),

while MPGCC and the Employees continue good faith bargaining for a new agreement for a period of 12 months or until such time as a new enterprise agreement covering the affected workers comes into force, whichever occurs first.”

[14] Consideration of the Application will proceed upon the basis of the above undertaking proffered by the Applicant in the Applicant’s Supplementary Submission, such undertaking to be provided by MPGCC.

The Applicant’s case

[15] In the Form 24C Statutory Declaration, Mr Barry Morris attested that:

(a) termination of the Agreement was not contrary to the public interest because:

“1. The termination will not affect achievement of the objects of the Fair Work Act 2009 (Cth).

2. The termination will not affect employment levels.

3. The termination will not affect inflation.

4. The termination will not affect the maintenance of proper industrial standards.”

And:

(b) The effect of the termination of the Agreement on the circumstances of the Applicant (and a group of employees) would be:

“1. The agreement is some 4 months past its nominal expiry date and should not operate in perpetuity since it has a finite nominal life. It is unreasonable to lock an expired agreement in place indefinitely.

2. The agreement has a continuing application to only five (5) employees, representing less than 10% of the employer's workforce. Those 5 employees are no longer employed by the employer entity in the agreement, which is no longer trading. The remainder of the employer's workforce are employed on individual contracts and the terms and conditions of their employment would not be affected at all by termination of the agreement.

3. It will enhance the prospects of the parties concluding a new agreement through good faith bargaining. There is nothing inconsistent with the termination the termination of an enterprise agreement that has passed its nominal expiry date and collective bargaining in good faith.”

[16] The Applicant asserted that there is “a bargaining stalemate for a new agreement between MPGCC and the relevant workers” 2. MPGCC’s sole Director, Mr James Morris, was said to lead the bargaining for the employer. He has not met with the relevant workers for the purposes of bargaining since September 2019. The alleged stalemate is alleged to be “driven, at least in part, by the CFMMEU’s description of the [agreement termination] Application as a ‘hostile move’” in a letter from the CFMMEU to Mr James Morris dated 12 September, 2019.

[17] The Applicant also asserts that “The Agreement is not Building Code 2016 compliant, which is of significant detriment to MPGCC, as it is a code -covered entity” 3.

The CFMMEU’s case

[18] The CFMMEU opposes termination of the Agreement on the basis that:

(a) The termination is contrary to the public interest.

(b) It is not appropriate to terminate the agreement given that:

(i) the majority of employees covered by the agreement oppose its termination;

(ii) the CFMEU holds the view that the termination should not occur; and

(iii) for the workers covered by the agreement, the termination of this agreement would have significant effects on their income, employment and quality of life.

[19] The primary (perhaps sole) effect of the Application is to remove the protection of a statutory instrument covering the workers who have transferred from the Applicant to MPGCC, and whose workmates in the related entity are covered by individual contracts.

[20] As the effect of the Application would be to diminish the rights of one part of the workforce of MPGCC without affecting other workers under different instruments, it would appear to run counter to s.3(e) of the Act, which lists one of the objects of the act as: “protecting against unfair treatment and discrimination”. Unilaterally reducing the wages and conditions of one part of the workforce appears at least unfair, if not actively discriminatory.

[21] There exists no “stalemate” in negotiations. Only one formal meeting of bargaining representatives has occurred, and two informal conversations. Bargaining is not exhausted. The letter of 12 September 2019 is not coercive, intimidatory or threatening. The letter does not even characterise the Application itself as a hostile move. Instead, it makes an assertion about agreement terminations generally, as follows:

“The agreement termination process, where it occurs in the context of bargaining for a new enterprise agreement, is generally considered a hostile move, opening up the employer’s workforce to unilateral management action to reduce wages and conditions.”

[22] The letter was in fact a good faith attempt to set out concerns by the CFMMEU about the Application now to be determined and resolve matters to the satisfaction of all parties.

[23] As to compliance with the Building Code, the Agreement was assessed as being non-compliant by the regulator on 29 August 2017. The CFMEU (as it then was) provided the Applicant with a proposed variation to the Agreement that was preliminarily assessed as being code compliant on 27 September 2017. The Applicant did not respond to that proposal.

Consideration

[24] The terms of Sections 225 to 227 of the Act are:

“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 s.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.”

[25] The Application is competently before the Commission in that the Agreement has passed its nominal expiry date, the Applicant is entitled to make the Application as an employer covered by the Agreement (s.225(a)), and the CFMMEU is an employee organisation covered by the Agreement (s.225(c)).

(a) Public interest

[26] Section 226(a) brings into focus the question of the public interest. In Kellogg Brown & Root Pty Ltd and others v Esso Australia Pty Ltd[2005] AIRC 72 (Kellogg Brown), the Full Bench of the Australian Industrial Relations Commission (AIRC) said (at [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.”

[27] I do not consider that it is contrary to the public interest to terminate the Agreement. Such termination would have no effect on anyone other than the parties immediately involved.

(b) Appropriateness

[28] I do not, however, consider that it is appropriate to terminate the Agreement taking into account all of the circumstances, including the views of the three employees, MPGCC and the CFMMEU, and the circumstances of each of those parties.

[29] Unless an application seeking the termination of an existing agreement under s.225 of the Act is based on a sound evidentiary foundation, such an application is unlikely to succeed. Making mere assumptions or simply expressing a preferred point of view, is unlikely to meet the evidentiary standards required in a case under s.225 of the Act 4.

[30] The Applicant’s case, and the positions put by MPGCC, have all the hallmarks of seeking to repeat conclusions from previous authorities where agreement terminations have been granted, whether or not those conclusions can be drawn from the facts of this matter. The classic example of that erroneous approach is the assertion of a “stalemate” in negotiations that I am invited to conclude can be inferred from the letter of 12 September 2019, from the CFMMEU to Mr James Morris (the 12 September Letter). A copy of the 12 September Letter is Annexure A to this decision.

[31] I agree with the CFMMEU’s characterisation of the 12 September Letter. It is a “remarkably mildly-worded letter”, which is a “a good faith attempt to set out concerns by the CFMMEU about the Application now to be determined and resolve matters to the satisfaction of all parties”. 5 The Applicant’s, and MPGCC’s, characterisations of the 12 September Letter are baseless.

[32] The 12 September Letter also records a number of other important facts, being:

(a) while the CFMMEU wrote to Mr Morris seeking to begin negotiations on 3 July 2019, the Application was filed some six weeks later on 19 August 2019;

(b) the Application has a disproportionate effect on the employees covered by the Agreement, with the bulk of workers not being so affected; and

(c) the Applicant was, politely, asked to withdraw the Application.

[33] It would seem that negotiations for a new agreement never really got going before the Application. CFMMEU received no written communication from the Applicant or MPGCC in relation to its invitation to bargain on 3 July 2019, and no communication warning of an application for termination.

[34] While it would appear that the Agreement is not Building Code compliant, that is not a new development. As noted above, the Agreement was assessed as being non-compliant with the Building Code by the regulator on 29 August 2017. The CFMMEU provided the Applicant with a proposed variation to the Agreement that was preliminarily assessed as being Building Code compliant on 27 September 2017, however the Applicant did not respond to that proposal.

[35] While the undertaking proffered by the Applicant and MPGCC in the Applicant’s Supplementary Submission should provide significant comfort to the employees affected and the CFMMEU, such undertakings cannot cure the sheer absence of substance in the Applicant’s case. In the absence of any real attempts at negotiating a new agreement, and in circumstances where there is certainly no “stalemate” in negotiations, it would be inappropriate to terminate the Agreement.

[36] For the reasons herein expressed, I find that while it would not be contrary to the public interest, it would be inappropriate to terminate the Agreement. That being so, the Application must be dismissed. An order to that effect will be issued simultaneously with this decision.

DEPUTY PRESIDENT

<AE419083  PR716508>

Annexure A

 1 CFMMEU Supplementary Submission at [3].

 2   Applicant’s Further Submission at [7ii].

 3   Applicant’s Further Submission at [7iii].

 4   SDV (Australia) Pty Ltd [2013] FWC 5385.

 5 CFMMEU Supplementary Submission at [19].

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