Mr Francesco Theil-Harkin
[2017] FWCA 1595
•7 JULY 2017
| [2017] FWCA 1595 |
| 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
s.319 - Application for an order relating to instruments covering new employer and non-transferring employees
Mr Francesco Theil-Harkin
(AG2015/7450)
Mr Andrew May
(AG2016/6740)
Wilson Security Pty Ltd
(AG2016/7828)
WILSON SECURITY- WESTERN AUSTRALIA COLLECTIVE AGREEMENT 2009
Security services | |
DEPUTY PRESIDENT BINET | PERTH, 7 JULY 2017 |
Application for termination of the Wilson Security - Western Australia Collective Agreement
[1] On 30 November 2015, Mr Francesco Theil-Harkin (Mr Theil-Harkin), in his capacity as an employee of Wilson Security Pty Ltd T/A Wilson Security (Wilson Security), made an application (Theil-Harkin Application) to the Fair Work Commission (FWC) to terminate the Wilson Security – Western Australia Collective Agreement 2009 (Agreement).
[2] The Agreement was approved by the Workplace Authority pursuant to section 327 of the Workplace Relations Act 1996 (Cth) on 16 September 2009 and commenced operation seven days later. The Agreement has a nominal expiry date of 30 June 2014.
[3] Clause 2 of the Agreement identifies the parties to the Agreement as Wilson Parking 1992 Pty Ltd (Wilson Parking) and the employees of Wilson Parking employed as security guards in Western Australia.
[4] Wilson Parking and Wilson Security are associated entities. 1
[5] On 30 March 2014, Wilson Parking assigned its security services contracts to Wilson Security and terminated the employment of its security services employees. On 31 March 2014 (Transfer Date), Wilson Security employed these employees to perform the same or substantially the same work as they were performing for Wilson Parking (Transferring Employees). 2
[6] Subsequently, Wilson Security has employed additional employees to perform the same, or substantially the same, work as the Transferring Employees. 3
[7] For the purposes of Schedule 3 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) (Transitional Act), the Agreement is a Collective Agreement-Based Transitional Instrument. By virtue of Item 8 of Schedule 3 of the Transitional Act and section 313 of the FW Act, the Transferring Employees and Wilson Security are covered by the Agreement.
[8] By virtue of Item 16 of Schedule 3 of the Transitional Act, the Agreement may be terminated pursuant to section 226 of the Fair Work Act 2009 (Cth) (FW Act).
[9] The Theil-Harkin Application was allocated to Commissioner Gregory in Melbourne who listed the matter for a conference on Monday, 8 February 2016. The matter was adjourned following the conference to allow Mr Theil-Harkin, Wilson Security and United Voice (in its capacity as the default bargaining representative) to commence bargaining for a replacement enterprise agreement. 4 Seven negotiation meetings were held between 29 March 2016 and 21 June 2016 but no substantive progress was made towards agreeing a replacement enterprise agreement.5
[10] United Voice then lodged a subsequent application for bargaining assistance on 22 June 2016, following which two conferences were held on 13 July 2016 and 5 September 2016 but again, no substantive progress was made. 6
[11] On 13 July 2016 and 5 September 2016; United Voice and Wilson Security attended conferences before Deputy President Binet in relation to the Agreement (matter B2016/651).
[12] On 24 October 2016, Mr Thiel-Harkin filed an application to deal with a bargaining dispute. This matter was subsequently discontinued by the FWC. 7
[13] On 31 October 2016, Mr Andrew May (Mr May), in his capacity as an employee of Wilson Security, lodged a separate application (May Application) to the FWC to terminate the Agreement. The May Application was allocated to Deputy President Binet in Perth.
[14] On 12 December 2017, the Theil-Harkin Application and the May Application were joined (Termination Applications).
[15] On 14 December 2016, the FWC issued directions to the parties in respect of the Termination Applications.
[16] Subsequently, on 19 December 2016, Wilson Security, in its capacity as the new employer, made an application (Extension Application) for an order pursuant to section 319(1)(b) of the FW Act as amended by Schedule 11 Item 8(5)(c) of the Transitional Act. The order sought by Wilson Security (Order) is that the Agreement cover non-transferring employees of Wilson Security not currently covered by the Agreement who perform, or are likely to perform, the same work as the Transferring Employees (Non-Transferring Employees).
[17] Wilson Security sought the Order to avoid a situation where Wilson Security’s employees in Western Australia may be covered by two different industrial instruments when working side by side and performing the same type of work.
[18] On 21 December 2016, the Extension Application was joined to the Termination Applications. Amended directions, to replace those issued in relation to the Termination Applications on 14 December 2016, were issued on 21 December 2016. Following submissions in relation to the dates for compliance with those amended directions, further Amended Directions were issued in respect of all three related Applications on 23 December 2016 (Amended Directions).
[19] On 23 December 2016, Wilson Security emailed a draft agreement to the bargaining representatives. Between that date and the filing of final submissions, the parties have not held any further bargaining meetings. 8
[20] On 30 January 2017, United Voice sought permission under section 590 of the FW Act to be heard as a full participant in the proceedings, including permission to lead its own evidence and to cross examine witnesses called by the parties (Standing Application). Wilson Security objected to United Voice’s Standing Application.
[21] On 31 January 2017 and 1 February 2017, respectively, United Voice and Wilson Security filed with the FWC written submissions in respect of United Voice’s Standing Application, in accordance with the FWC’s directions dated 30 January 2017.
[22] On 3 February 2017, by way of decision [2017 FWC 696], United Voice were granted standing to be heard with respect to the Termination and Extension Applications.
[23] The Termination and Extension Applications were heard on 16 March 2017. Mr Theil-Harkin appeared on his own behalf. Ms Naomi McCrae appeared on behalf of United Voice and Mr May, who is a member of United Voice.
[24] Wilson Security sought to be represented at the Hearing by Mr Jason Donnelly of National Workplace Lawyers. The Amended Directions provided the parties with an opportunity to object to the other party being represented. Taking into account the submissions of the parties leave to represented was granted to Wilson Security pursuant to section 596 of the FW Act.
[25] Witness statements were filed and/or oral evidence given at the Hearing on behalf of Mr May and United Voice by Mr May and four other security officers employed by Wilson Security: Mr Jeffrey Bryson (Mr Bryson), Mr Brian Hewson, Mr Michael Zolker (Mr Zolker), Mr Michael Cotgrave (Mr Cotgrave), and Mr Syed Hussein (Mr Hussein). A witness statement was filed, and oral evidence given, by Ms Lorna Hughes, lead organiser at United Voice, on behalf of Mr May and United Voice.
[26] Mr William Daly (Mr Daly), the General Manager of Western Australia for Wilson Security, gave evidence, by way of witness statements and orally, on behalf of Wilson Security.
[27] The Amended Directions directed Wilson Security to provide copies of the materials filed in relation to the Applications on the Transferring and Non-Transferring Employees and invited any employee who wished to make a submission regarding the Applications to do so by filing a written statement by close of business, 10 February 2017. No submissions from any employees were received by this date.
[28] The legal representatives of Wilson Security subsequently filed witness statements on behalf of Wilson Security security officers Mr David Anderson (Mr Anderson), Mr Giovanni Pillera (Mr Pillera), Mr Brett Tingey (Mr Tingey), Mr Stephen Keymer (Mr Keymer), Mr Walter Shelley (Mr Shelley), Ms Jeanne McCorkell (Ms McCorkell), Mr Albert Botica (Mr Botica) and Mr Joseph Melder (Mr Melder), purportedly in response to the Amended Directions. Mr Tingey, Mr Pillera and Mr Anderson gave oral evidence at the Hearing.
Legislation
[29] Subdivision D of Division 7 of Part 2-4 of the FW Act sets out the mechanism by which an enterprise agreement may be terminated after the agreement has passed its nominal expiry date.
[30] Section 225 of the FW Act provides that:
“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.”
[31] It is not contested that Mr Theil-Harkin and Mr May are employees of Wilson Security and have standing to make their respective applications. 9
[32] Section 226 of the FW Act states:
“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.”
[33] Section 319(3) of the FW Act states:
“Matters that the FWC must take into account
(3) In deciding whether to make the order, the FWC must take into account the following:
(a) the views of:
(i) the new employer or a person who is likely to be the new employer; and
(ii) the employees who would be affected by the order;
(b) whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment;
(c) if the order relates to an enterprise agreement—the nominal expiry date of the agreement;
(d) whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace;
(e) whether the new employer would incur significant economic disadvantage as a result of the transferable instrument covering the new employer;
(f) the degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer;
(g) the public interest.”
Order of determination of the Applications
[34] Wilson Security submitted that the Extension Application should be heard before the Termination Applications. 10 Both Termination Applications predated the Extension Application. But for Mr Theil-Harken and Mr May’s willingness to participate in conciliation in good faith, both Termination Applications are likely to have been determined prior to the date on which Wilson Security filed the Extension Application. Whether or not the Extension Application is successful, the Termination Applications would still require determination. However, if the Termination Applications are successful, it will be unnecessary to determine the Extension Application. For these reasons, the Termination Applications and the Extension Application were all heard together and the Termination Applications dealt with first in this decision.
Is it contrary to the public interest to termination the Agreement?
[35] Section 226(a) requires the FWC to be satisfied that it is not contrary to the public interest to terminate the Agreement.
[36] This requires the FWC to consider how the termination of the agreement might foreseeably affect the public as a whole, such as the impact on the achievement or otherwise of the various objects of the Act, employment levels, inflation and the maintenance of proper industrial standards. 11
[37] The public interest is distinct in nature from the interests of those covered by the Agreement. The views of those covered by an agreement may be relevant to the exercise of the discretion if they shed light on the effect of the termination on public interest, but those views should not be given any independent weight. 12
[38] United Voice is not covered by the Agreement. There is therefore no statutory obligation to take into consideration its views pursuant to section 226(b). However, as the employee organisation with coverage of the security industry, it is well placed to make submissions and lead evidence in relation to the impact of the termination of the Agreement on the public more broadly beyond its impact on those parties covered by the Agreement.
[39] The object of the FW Act is set out in section 3 of the FW Act as follows:
“3. Object of this Act
The object of this Act is to provide a balanced framework for cooperative and productive workplace relations that promotes national economic prosperity and social inclusion for all Australians by:
…
(b) ensuring a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions through the National Employment Standards, modern awards and national minimum wage orders;
…
(f) achieving productivity and fairness through an emphasis on enterprise level collective bargaining underpinned by simple good faith bargaining obligations and clear rules governing industrial action;
…”
[40] The specific objects in section 171 of the FW Act inform how the general object in section 3 of the FW Act is to be satisfied in the context of matters dealt with in Part 2-4 of the FW Act:
“171. Objects of this Part
The objects of this Part are:
(a) to provide a simple, flexible and fair framework that enables collective bargaining in good faith, particularly at the enterprise level, for enterprise agreements that deliver productivity benefits; and
(b) to enable the FWC to facilitate good faith bargaining and the making of enterprise agreements, including through:
(i) making bargaining orders; and
(ii) dealing with disputes where the bargaining representatives request assistance; and
(iii) ensuring that applications to the FWC for approval of enterprise agreements are dealt with without delay.”
[41] The Agreement was approved by the Workplace Authority on 16 September 2009. At that time, the Agreement was required to pass the ‘No Disadvantage Test’ as compared to the Security Officers (Western Australia) Award 2002. Since that time, the reference award has been replaced by the Modern Award: the Security Industry Services Award 2010 (Security Award). The approval test has been replaced with the Better Off Overall Test (BOOT).
[42] The minimum terms and conditions of employment in the security industry are now determined by the Security Award and the National Employment Standards (NES).
[43] In the more than seven years since the Agreement was approved, the minimum terms and conditions in the security industry have changed significantly. Wilson Security concede that many of the terms and conditions in the Agreement fall below the minimum terms and conditions of employment prescribed by the Security Award. 13
[44] The rates of pay and many allowances provided for by the Agreement have fallen well below the prevailing minimum rates as set out in the Security Award. 14 Item 13, Schedule 9 of the Transitional Act ensures employees covered by the Agreement are paid the minimum base rates of pay as set out in the Security Award. However, employees covered by the Agreement are, contrary to the objects of the FW Act, being paid allowances at rates below the minimum established by the Security Award. In addition, a number of allowances prescribed by the Security Award, such as the Relieving Officer Allowance, are not contained in the Agreement.
[45] Furthermore, many loadings in the Agreement are lower than those minimum established by the Security Award. For example:
Type of Loading | Agreement Rate | Security Award Rate |
Casual loading | 20% | 25% |
Sunday loading | 75% | 100% |
Permanent night shift loading | 25% | 30% |
[46] In addition, clause 16 of the Agreement provides for employees to work hours in addition to their ordinary hours as either ‘rostered additional hours’ or ‘voluntary additional hours’. Both types of hours are worked at the employee’s base rate of pay. In contrast, clause 23 of the Security Award provides that employees who work overtime are paid an overtime loading of between 50% and 150%, depending on when the work is performed.
[47] The quantum of ‘additional hours’ worked under the Agreement is uncapped. Unlike the Award, the Agreement does not provide for extended breaks for employees working onerous roster cycles. This creates a risk that employees, working under the Agreement in a profession which requires alertness to ensure public safety, work unsafe work patterns. Mr Anderson, for example, gave evidence that he has, on occasion, worked three to four weeks straight of 12 hour shifts, working additional hours in addition to his normal rostered shifts. 15 The opportunity for this to continue to occur by not terminating the Agreement has the potential to expose not only Wilson Security employees but the public more broadly to serious risk of harm.
[48] Furthermore, hours of work are averaged over 16 weeks under the Agreement rather than 8 weeks as proscribed by the Award. Consequently, employees are not entitled to overtime under the Agreement in circumstances in which they would be eligible for overtime under the Security Award.
[49] The minimum shift duration for a permanent employee covered by the Agreement is four hours as compared to the Security Award minimum of 7.6 hours and, unlike the Security Award, the Agreement does not contain a broken shift allowance.
[50] Probationary employees suffer further at the hands of clause 14.3 of the Agreement, which provides that probationary employees will be paid 96% of the applicable Level 1 or Level 2 rate. There is no equivalent provision in the Security Award.
[51] The Agreement also lacks consultation and flexibility arrangements contained in the Security Award which are mandatory terms in new enterprise agreements.
[52] There are only a handful of instances in which the Agreement provides for a benefit greater than that prescribed by the Security Award and, in most cases, these relate to conditional allowances. For example, the Firearm Allowance contained in the Agreement is currently higher than that prescribed by the Award. However, it is conditional upon an employee operating a firearm. These conditional benefits, combined with any other entitlement under the Agreement which is comparable with the Award, are not sufficient to make employees better off overall under the Agreement than the Award. [
[53] Wilson submitted that the availability of voluntary additional hours and rostered additional hours under the Agreement provided a benefit to employees because it provided them with an opportunity to earn additional income, which would be lost if the Agreement was terminated. 16 However, the Agreement does not enshrine any particular minimum entitlement to additional hours of work. Access to additional hours of work is entirely at the discretion of Wilson Security. The ability for Wilson Security to provide employees with the opportunity to earn additional income at its discretion applies equally under the Agreement and the Security Award. Furthermore, if the Agreement was terminated, not only would employees be entitled to higher rates of pay, allowances and loadings, they would also be entitled to overtime rates of pay for additional hours of work.
[54] The objects in sections 3(f) and 171(a) of the FW Act are the facilitation of good faith bargaining and the making of enterprise agreements that deliver productivity benefits. The termination of an agreement can provide significant impetus for parties to negotiate replacement enterprise agreements. Despite negotiations extending well over a year, various applications to the FWC, and the assistance of two members of the FWC, the parties in this matter have been unable to agree the terms of an enterprise agreement.
[55] In some circumstances, it may be inappropriate for the FWC to interfere in the bargaining process by terminating an agreement so as to substantially alter the status quo in relation to the balance of bargaining between the parties. This is, however, not one of those situations.
[56] In this case, the termination of the Agreement will not lead to a sudden change in work arrangements, pay and/or conditions for an entire workforce that would have significant and immediate administrative and operational implications, unfairly forcing Wilson Security to concede to unreasonable claims by the workforce. Forty per cent of the workforce is currently covered by the Security Award. 17 Wilson Security therefore must already have the necessary administrative arrangements and work practices in place to ensure compliance with the Security Award.
[57] The Security Award sets the minimum standards that Wilson Security’s competitors must meet, and the parameters in which they must operate. Compliance with the Award should not commercially disadvantage Wilson Security so significantly that it is forced to concede to unreasonable claims. In fact, it is in the public interest, and consistent with the objects of the FW Act, to ensure that compliance by Wilson Security’s competitors with the minimum terms and conditions in the Security Award does not commercially disadvantage those competitors as against Wilson Security because Wilson Security are operating under an Agreement containing terms well below the minimum set by the Security Award.
[58] In fact, the commercial advantage Wilson Security currently obtains from not being obliged to meet the minimum entitlements contained in the Security Award, unlike its competitors, is a positive disincentive to Wilson Security negotiating a new enterprise agreement. 18
[59] If, as Wilson Security submit, their preference is not to have the Security Award apply to the totality of their workforce, the termination of the Agreement is likely to provide the stimulus for further negotiations for an enterprise specific arrangement more suitable to Wilson Security’s business needs while ensuring that the objects of the Act in relation to ensuring minimum terms and conditions of employment are satisfied.
[60] Wilson Security have proposed a number of significant undertakings to address some of the shortcomings of the Agreement as compared to the Security Award. 19 Typically, undertakings have been accepted by the FWC where reversion to the relevant award would result in a significant reduction in the terms and conditions of employment for employees as compared to the terminated Agreement.20 This is not such a case. In this matter, the undertakings are necessary to match significantly more generous entitlements contained in the relevant Award.
[61] The scope and number of the undertakings proposed by Wilson Security reflects the extent to which the Agreement has fallen behind modern minimum standards of employment in the security industry. The scope and number of the undertakings would far exceed anything that would be permitted in relation to an application for approval of a modern enterprise agreement. Rather than provide a basis on which the Agreement might be permitted to continue beyond its current life span of seven years, the proposed undertakings merely emphasises how out of touch the Agreement has become.
[62] Given the scope and number of these undertakings, acceptance of the undertakings would undermine section 3(f) of the FW Act by allowing one party to dictate the terms of an enterprise agreement rather than negotiating the terms of the agreement with the other parties to the agreement.
[63] If, as Mr Daly conceded in cross examination, the cost of Wilson Security’s preferred option of applying the Agreement in conjunction with the undertakings Wilson has proposed would cost more than the Award, 21 then there seems scope for Wilson Security to negotiate a new enterprise agreement more suitable to Wilson Security’s business needs than the Security Award while ensuring that the objects of the Act in relation to ensuring minimum terms and conditions of employment are satisfied.
[64] Based on the submissions of the parties and the evidence before me, I am therefore satisfied that it is in the public interest to terminate the Agreement.
What are the views of the Employees and Employee Organisations covered by the Agreement?
[65] As United Voice is not covered by the Agreement, there is no statutory obligation to take into consideration its views pursuant to section 226(b). However, United Voice did provide evidence in respect to the views of its members and the views of non-members provided to its organisers.
[66] The evidence of Mr Bryson, Mr Fewson, Mr Zolker, Mr Cotgrave, Mr Hussain, Mr May and Mr Theil-Harkin was that they, and many other employees, supported the termination of the Agreement. United Voice say that this is consistent with an anonymous online survey, expressed in neutral terms, which they commissioned in October 2016. According to the survey, 93% of the 43 respondents indicated that they were in favour of terminating the agreement. The evidence of these employee witnesses and Ms Hughes was that, to the extent other employees did not support the termination of the agreement, those employees did so as a result of coercion or misinformation. 22
[67] Given there are approximately 340 employees covered by the Agreement, the sample size of the United Voice survey is relatively small. However, the anonymity associated with the collection of the data attaches some credibility to the results. The evidence of the views of other employees is mostly anecdotal.
[68] Wilson Security also led evidence in relation to employee views. According to Wilson Security, an overwhelming majority of employees do not support the termination of the Agreement. As evidence of employee views, Wilson Security tendered the results of a petition opposing termination of the Agreement (Petition). According to Wilson Security, 257 of the 340 Transferring Employees signed the petition opposing the termination of the Agreement. 23
[69] It is important to note that section 226 requires the FWC to take into consideration only the views of those employees covered by the Agreement. Notwithstanding this, Wilson Security has sought to artificially bolster its case by relying on data obtained from the Non-Transferring Employees. See, for example, the following extract from Wilson Security’s Closing Submissions: 24
“172. The evidence is that 77% of the employees objected to the application of Mr Theil-Harkin and Mr May. That is 447 of the 578 employees do not want the Agreement terminated.
173. The fact that 77% of the employees oppose the application is compelling and taken together with the Company’s views on the matter justify the Commission dismissing the Termination Applications.
174. The Company respectfully submits the Commission cannot ignore such a majority support against the Termination Applications.”
[70] In Appeal by AWX Pty Ltd [2013] FWCFB 8729 at [23], the Full Bench counselled against reaching a conclusion about the views of employees based exclusively on an examination of the response to a vote.
“We do not share the view of AWX that a simple examination of the response to a vote is indicative or conclusive of the exercise of jurisdiction or not. Whether or not the jurisdiction is exercised will depend on the particular facts and the opportunities presented to employees (or those covered by the agreement for that matter) to express a genuine view, free from any form of coercion.”
[71] There are various aspects of the Petition and the manner in which it was conducted that potentially taint the numerical outcomes of the Petition. The evidence suggests that employees were presented with the Petition personally by their manager and requested to sign the Petition with some urgency. 25 It appears that employees were not afforded privacy or anonymity. There is a real risk that employees in these circumstances might feel coerced into signing the petition. This is consistent with the evidence of employees such as Mr Hussein, who gave evidence that he signed the Petition because he ‘… did not want to make any fuss with Wilson Security”,26 and with the evidence of Ms Hughes of comments made to her by both union members and non-union members.27
[72] The perception of coercion could have easily been reduced or avoided by a variety of different mechanisms, such as the SMS or online balloting frequently used for agreement approvals, in conjunction with the provision to employees of a concise summary of the ‘yes’ and ‘no’ cases utilised in Employees of AWX Pty Ltd [2013] FWCA 4490 at [6]. Alternatively, Wilson Security could have emailed the Petition to employees for them to complete in private at a time convenient to the employee to do so. The evidence before the FWC is that Wilson Security routinely emails important information to employees and that this, in fact, was the method utilised to distribute copies of the Extension Application and Mr Daly’s Statutory Declaration to employees. 28 The use of email would have also provided a more timely mechanism than the one chosen to ascertain employee views.
[73] In addition to being asked to sign the Petition, Wilson Security say that the managers who presented the Petitions to employees also made a contemporaneous written note of employee comments in relation to the proposed termination of the Agreement. None of the managers who allegedly collected this information were called as witnesses by Wilson Security, nor were any of the written records of the managers tendered. The uniformity of response also casts doubt about the authenticity of the comments. 29
[74] The theme of the majority of the comments allegedly collected by the managers was that employees did not want to change, or more specifically, did not want a change to hours of work. This appears to reflect the information provided to employees in the Petition and in employee communiques prior to the circulation of the Petition. 30
[75] The information circulated to employees prior to the Petition emphasised that the opportunity to work additional hours would cease if the Agreement was terminated. 31
[76] It was not made clear to employees that:
- The decision not to offer the opportunity to perform additional hours was a discretionary decision by Wilson Security.
- The Security Award does not prevent Wilson Security offering employees the opportunity to perform additional work and earn additional income.
- The Security Award contains the minimum statutory terms and conditions of employment.
- The Agreement contains many terms and conditions which are less beneficial than those contained in the Security Award.
- The Security Award is not the only alternative in the event that the Agreement is terminated. The parties could agree terms for a new enterprise agreement which provide an opportunity for employees to perform additional work and earn additional income.
[77] In fact, Wilson Security’s communication with the employees was mischievous because it implied that the recent reversion of Non-Transferring Employees to award conditions was the fault of United Voice, 32 rather than a consequence of a failure by Wilson Security to apply for orders pursuant to section 319 at any time during the more than three years since the Transfer Date. See, for example, Exhibit R4 at Annexure WD-2:
“… the union has asked the business to cease applying our Current EA to employees who started with us on or after 1 April 2014…
…
As a consequence of the Company agreeing to the union’s request …we could no longer apply the Voluntary Additional Hours and Rostered Additional Hours clause … we therefore need to implement roster changes to eliminate, or significantly minimise, overtime in the business due to the extra cost of overtime under the union’s preferred model.”
[78] Mr Daly gave evidence that the Petition was conducted on or after 23 December 2016. 33 It seems likely that the Petition was completed on or before 25 January 2017 because Wilson Security’s Outline of Submissions, dated 25 January 2017, refer to evidence in the Supplementary Statement of Mr Daly detailing the outcome of the Petition.34 Copies of the Termination Applications were provided to employees on 25 January 2017 and 27 January 2017.35 It would therefore appear that the Petition was conducted prior to Wilson Security complying with the direction of the FWC to provide copies of the Termination Applications to employees. Therefore, employees did not have the benefit of the arguments in favour of the termination prior to being asked to sign the Petition in which they assert they are opposed to the Termination Applications.36
[79] In these circumstances, I am not satisfied that the results of the Petition necessarily genuinely reflect the views of Wilson Security employees with respect to the termination of the Agreement, that those views were properly informed, or that those views were validly held.
[80] Wilson Security also relied on the evidence of Messrs Pillera, Tingey, Anderson, Keymer, Shelley, Botica, and Melder and the evidence of Ms McCorkill. Except in the pro forma covering declarations, many of these employees do not expressly object to the Termination Applications. Instead, the employees all express concerns about changes in rostering and the impact of the loss of the opportunity to perform additional hours of work on their take home pay. The evidence of the employees as to loss of income is hypothetical and predicated upon Wilson Security implementing its threat to cease offering employees additional hours of work. Whether Wilson Security will, or even operationally can, make good on this threat is not clear. Of these witnesses who were cross examined, it was clear that they were unaware of the beneficial entitlements contained in the Security Award. 37
[81] Based on all the evidence before me, I am not satisfied that, as Wilson Security submit, a majority of employees are sufficiently informed to validly hold the view that they oppose the Termination Applications. At best, it can be said that employee views in relation to the Termination Applications are mixed.
What are the views of the Employer covered by the Agreement?
[82] The view of Wilson Security is that the Agreement should not be terminated because it would result in all employees being covered by the Security Award, a generic industrial instrument which is not tailored specifically to Wilson Security’s business needs. 38
What are the circumstances of the Employees and Employee Organisations covered by the Agreement?
[83] As United Voice is not covered by the Agreement, there is no statutory obligation to take into consideration its circumstances pursuant to section 226(b). However, United Voice did lead evidence and make submissions in respect to the circumstances of its members and employees eligible to be its members. United Voice submitted that the effect of the termination of the Agreement on employees will be that they will be covered by a modern award which has far more generous entitlements than the Agreement.
[84] Wilson Security conceded that termination of the Agreement would result in employees being entitled to the more beneficial entitlements contained in the Award but submitted that the same outcome could be achieved without the termination of Agreement by virtue of the undertakings proposed by Wilson Security. 39
[85] Mr Daly also asserted that, if the Agreement was terminated, Wilson would cease to offer employees additional hours of work because it would be commercially unviable to do so, and that this would impact negatively financially on employees. 40 Wilson Security also submitted that the current Agreement permits rostering arrangements which provide employees with an enhanced opportunity for a work/life balance which would be lost if the Agreement was terminated.41
What are the circumstances of the Employer covered by the Agreement?
[86] Wilson Security submitted that it has tendered for work and entered into contracts with clients based on the cost structure under the Agreement. Wilson Security asserted that if the Agreement is terminated, it will create uncertainty in relation to how it will service its contracts with clients. Wilson Security also submitted that the Agreement permits a degree of operational flexibility and productivity that is not available under the Security Award. 42
[87] Wilson Security asserted that if the Agreement is terminated, employees would not be offered ‘additional hours’ work resulting in a reduction in employee take home pay and consequently this would cause some employees to see work elsewhere, creating instability in the company’s workforce. 43
Is it appropriate to terminate the Agreement taking into all the circumstances?
[88] In assessing the views and circumstances of the parties it is important to remember that:
“Taking into account the views and circumstances of the parties involves far more than an expression of their views in support or opposition to termination. It should involve a reason for their views and the validity of their concerns.” 44
[89] The Agreement was approved by the Workplace Authority on 16 September 2009 and it reached its nominal expiry date on 30 June 2014. In the more than seven years since the Agreement was approved, the minimum terms and conditions in the security industry have changed significantly. It is not unusual for minimum terms and conditions of employment to improve over time, which is why the case for termination typically strengthens the longer an agreement has expired. 45
[90] Wilson Security concede that many of the terms and conditions in the Agreement fall below the minimum terms and conditions of employment now prescribed by the Security Award, 46 and that termination of the Agreement would result in an entitlement to improved conditions for employees. However, Wilson Security submit that the same outcome could be achieved without the termination of Agreement by virtue of the undertakings proposed by Wilson Security.47 For the reasons outlined earlier in this decision, I am not satisfied that this is consistent with the objects of the FW Act, the intent of section 226 or with the authorities established by this Commission.
[91] A key plank of Wilson Security’s opposition to the Termination Applications is that the FWC should not terminate the Agreement because an effect of the termination of the Agreement will be the removal or reduction of the opportunity for employees to supplement their income by performing additional work and/or to work roster patterns which enable employees to achieve a work/life balance. To the extent that the opportunity to perform additional work is reduced or removed, and to the extent that roster patterns change, if the Agreement is terminated, these events will occur as a result of a business decision of Wilson Security. The extent to which the opportunity to perform additional work is reduced or removed, and the extent to which roster patterns change, is not a direct consequence of the termination of the Agreement. The Award does not prohibit employees performing overtime, nor does it prohibit rosters which accommodate employee work/life needs. A decision to reduce the opportunity to perform additional work and/or to change rosters is a decision Wilson Security could make at any time, whether or not the Agreement is terminated. Arguably, therefore, these are not matters which the FWC is required to take into consideration pursuant to section 226(b)(ii) because they are not an effect of the termination of the Agreement.
[92] Furthermore, I am not satisfied that the evidence led by Wilson Security establishes the removal or reduction of the opportunity for employees to supplement their income by performing additional work and/or removal of work roster patterns which enable employees to achieve a work/life balance is at this stage ‘likely’ as opposed to possible or even hypothetical, other than Mr Daly’s evidence that this will occur on his say-so.
[93] Wilson did not lead any detailed evidence to support its assertion that it would be financially compelled to cease offering additional hours of work and/or change existing roster patterns if the Security Award were to apply. For example, it did not tender information in relation to the quantum of additional hours currently being performed, the impact on the profitability of the business of those hours being performed at Security Award rates, limitations in its current contractual arrangements to pass some or all of those additional costs to clients, the roster patterns it proposes to implement, the business rationale for changing those roster patterns, the costs of those patterns or why the existing roster patterns could not be performed if the Security Award covered all Wilson Security’s employees and not just a portion of the workforce.
[94] It is not clear how Wilson could, in the short term, change its contractual obligations to remove the need for ‘overtime’ work which is currently being performed as additional hours. It is also not clear how Wilson Security could, in the short term, recruit a sufficient number of suitably qualified new employees to perform the work in ordinary hours, particularly for the sites of clients with specialised security clearance requirements. Even if Wilson Security could source such personnel, given Mr Daly’s concession that Wilson Security would incur additional costs employing new employees, is it not clear that the option of employing more employees to perform the work in ordinary hours would be more commercially advantageous than continuing to offer additional hours of work to the existing workforce. To the extent that the termination of the Agreement did result in the creation of job opportunities, this would be a matter which would be weighed favourably in relation to the public interest in terminating the Agreement. In the longer term, it would seem likely that Wilson would enter new contracts at a price point which took into account the overtime rates applicable under the Security Award in the same way that Wilson Security’s competitors currently do.
[95] Furthermore, under cross-examination, Mr Daly conceded that the cost of Wilson Security’s preferred option of applying the Agreement in conjunction with Wilson Security’s undertakings was, in fact, higher than complying with the Security Award. 48 This casts doubt on the credibility of the assertion that Wilson Security would be financially compelled as a consequence of the termination of the agreement to withdraw the opportunity for employees to perform additional work or work rosters which are work/life balance friendly.
[96] In any event, if the Agreement is terminated, and if Wilson Security can, and do, reduce the opportunity for employees to earn additional income working additional hours, employees would be entitled, as a minimum, to the higher rates of pay, allowances and loadings proscribed by the Security Award which would, in part or in whole, replace any lost income arising from a reduction in the availability of additional work.
[97] Wilson Security submitted that the current Agreement permits rostering arrangements which provide employees with enhanced opportunity for work/life balance without explaining how the Security Award would prevent Wilson Security continuing to extend such flexibility to its workforce. In fact, the current compulsory additional hours requirements contained in the Agreement are likely to adversely impact on work/life balance.
[98] The Agreement expired more than three years ago, the Thiel-Harken Application was made more than 18 months ago, and the parties have been in enterprise negotiations for more than a year. In these circumstances Wilson Security should have anticipated the likelihood that it would face different employment arrangements and cost structures in the foreseeable future and that those arrangements would, at a minimum, be better overall than those contained in the Security Award. Unless Wilson Security had no intention of concluding a new enterprise agreement, the prospect of different employment arrangements and cost structures should have been factored into Wilson Security’s contractual negotiations with existing and potential customers, thereby reducing any adverse commercial impacts arising from the termination of the Agreement or its replacement with a new enterprise agreement.
[99] Termination of the Agreement does not condemn Wilson Security to be permanently bound by the Security Award. Wilson Security can avail itself of the various mechanisms available within the FW Act to agree with its workforce terms of a new enterprise agreement.
[100] If Wilson Security is correct about the views of its employees about their satisfaction with the existing conditions of employment, and Wilson Security is prepared to make the necessary adjustments to those conditions to satisfy the BOOT, there should be no reason why a new enterprise agreement which is consistent with the particular needs of Wilson Security and its workforce can not be concluded in a timely manner.
Conclusion
[101] For the reasons enunciated above, I am satisfied that it is not contrary to the public interest to terminate the Agreement. On the contrary, based on the submissions of Wilson Security, the termination of the Agreement may, in fact, generate employment opportunities.
[102] Taking into account all the circumstances, including the views and circumstances of Wilson Security and its employees, I am satisfied that it is appropriate to terminate the Agreement.
[103] I am not satisfied that the views of Wilson Security and those employees who are opposed to the termination of the Agreement are accurately informed and/or validly held.
[104] The Agreement was approved more than six years ago and, with the exception of the base rates of pay which Wilson Security are statutorily bound to match to current minimum rates of pay, the benefits contained in the Agreement have fallen well below the minimum industry standards as prescribed by the Security Award. Termination of the Agreement will improve the circumstances of those employees covered by the Agreement by entitling them to modern minimum terms and conditions of employment.
[105] Based on the evidence of Mr Daly, this outcome would not be any more expensive than the preferred proposal of Wilson Security to maintain the existing agreement and supplement it with the undertakings proposed by Wilson Security. To the extent that the termination of the agreement impacts on Wilson’s cost structure, it is consistent with the objects of the Act that Wilson Security is not permitted to obtain a commercial advantage because its competitors are obliged to comply with the minimum standards established by the Security Award.
[106] Little evidence was led by Wilson Security of the consequences of the termination of the Agreement on Wilson Security’s cost structure. The key financial consequence of a changed cost structure identified by Wilson Security was that Wilson Security would pass on any reduction in profitability to employees by curtailing the amount of additional work which was offered to employees.
[107] In communications with employees, and in its submissions to the FWC, Wilson Security have focused on the alleged impact of the termination of the Agreement on the availability of additional hours of work and, to a lesser degree, roster patterns which are work/life balance friendly. The availability of additional hours of work is a matter which is entirely at the discretion of Wilson Security and is not, in any way, enshrined in the current Agreement. The Security Award does not prevent Wilson Security continuing to offer employees work/life friendly rosters. However, given the demographics of the workforce and the modest rates of pay in the sector, the opportunity to earn additional income and flexibility in rostering are key emotional and financial trigger points by which the workforce might be rallied to resist more modern employment arrangements.
[108] Consistent with the objects of the Act, termination of the Agreement will ensure employees, at worst, receive the minimum entitlements prescribed by the Security Award. There will no longer be a commercial disincentive to Wilson Security engaging in enterprise negotiations. Hopefully, this will provide the stimulus necessary for the parties to negotiate an enterprise agreement that accommodates Wilson Security’s business needs while ensuring employees are not denied the minimum entitlements afforded to other employees in the sector.
[109] If Wilson Security is correct about the views of its employees about their satisfaction with the existing conditions of employment, and Wilson Security is prepared to make the necessary adjustments to those conditions to satisfy the BOOT, there should be no reason why a new enterprise agreement can be concluded in a timely manner.
[110] Accordingly, the Agreementis terminated. The termination is to take effect on and from the date of this decision.
[111] Having determined that the Agreement be terminated, the Extension Application is now otiose and is therefore dismissed.
DEPUTY PRESIDENT
Printed by authority of the Commonwealth Government Printer
<Price code C, AC322632 PR591154>
Appearances:
N McCrae for United Voice and Mr A May.
F Theil-Harkin on his own behalf.
J Donnelly of National Workplace Lawyers for Wilson Security.
Hearing details:
2017.
Perth:
16 March.
1 Exhibit R3 at [6].
2 United Voice Closing Submissions at [4]-[9]; Exhibit R13 at [3]-[4].
3 Ibid at [8]; Exhibit R3 at [10].
4 According to Ms Hughes, United Voice unsuccessfully sought to initiate bargaining as early as June 2014: Exhibit A7 at [15].
5 United Voice Closing Submissions at [19] –[23].
6 Ibid at [23] –[26].
7 Ibid at [27] –[29].
8 Ibid at [83]-[84].
9 Exhibit R13 at [12].
10 Ibid at [14].
11 Re Kellogg Brown and Root, Bass Strait (Esso) Onshore/Offshore Facilities Certified Agreement 2000 (2005) 139 IR 34 at 40 – 41.
12 Ibid.
13 Exhibit R4 at [24].
14 Ibid.
15 Exhibit R7.
16 Exhibit R4 at [27].
17 Wilson Security Closing Submissions at [93].
18 Transcript PN1385 and PN1105-1127.
19 Exhibit R4 at [26] and Transcript at PN1111-1117.
20 See for example each of the authorities cited by Wilson Security in support of their submissions in relation to the provision of undertakings at [94] of Exhibit R13.
21 Transcript PN1111 - PN1114.
22 Exhibit A1, Exhibit A2 at [6]-[12] and [22]-[24], Exhibit A3 at [8]-[11], Exhibit A4 at [4]-[6], Exhibit A5 at [18]-[23, Exhibit A6, Exhibit A7 at [50]-[51], Exhibit TH1 and Exhibit A8.
23 Exhibit R4 at [12]-[22].
24 Wilson Security Closing Submissions at [172]-[174].
25 Exhibit A6 at [17]-[18], Exhibit A5 at [20]- [23] and [26], Exhibit A7 at [77].
26 Exhibit A6 at [23].
27 Exhibit A7 at [77].
28 Exhibit A6 at [24] and Exhibit R13 at [16]-[17].
29 See Exhibit R4 at [20]-[22].
30 See Exhibit R4 at Annexures WD1- WD3.
31 Ibid.
32 See for example Exhibit R4 Annexure WD--2.
33 Exhibit R4 at [12].
34 Exhibit R13 at [92].
35 Exhibit R14.
36 United Voice Closing Submissions at [126]-[128].
37 Exhibits R5-R12, Transcript PN1448 and PN1492.
38 Exhibit R13 at [74] and Wilson Security Closing Submissions at [168].
39 Exhibit R13 at [94].
40 Exhibit R4 at [28].
41 Exhibit R13 at [101].
42 Ibid at [89]-[90].
43 Exhibit R13 at [91] and Wilson Security Closing Submissions at [169].
44 Energy Resources Australia Ltd v Liquor, Hospitality and Miscellanous Union[2010] FWA 2434 at [16].
45 Ibid
46 Exhibit R4 at [24].
47 Exhibit R13 at [94].
48 Transcript PN1110-1111.
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