National Union of Workers v Kraft Foods Ltd

[2013] FWC 5818

[2013] FWC 5818

FAIR WORK COMMISSION

DECISION

Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
Sch. 6, Item 5 - Application to terminate an enterprise instrument

National Union of Workers
v
Kraft Foods Ltd
(EM2013/17)

National Union of Workers
v
The Smiths Snackfood Company Ltd
(EM2013/19)

National Union of Workers
v
Nestle Australia Ltd; "Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU)
(EM2013/20)

Food, beverages and tobacco manufacturing industry
COMMISSIONER RYAN	MELBOURNE, 22 AUGUST 2013

Application to terminate an enterprise instrument.

[1] Application has been made by National Union of Workers (NUW) pursuant to Item 5 of Schedule 6 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Transitional Act) for the Fair Work Commission to terminate each of the following enterprise instruments:

• A.P.D. Snack Foods Pty Limited (Superannuation) Award [AN150074]



• The Kraft Foods Limited - National Union of Workers - Superannuation Award 1995 [AP786367]



• The Uncle Tobys Company Pty Ltd Superannuation Award 1990 [AP801442]

[2] Item 10 of Schedule 6 of the Transitional Actprovides that the Fair Work Commission must, before July 2013, advise persons covered by an enterprise instrument that they have until 31 December 2013 to make applications for either the modernisation of the enterprise instrument or the termination of the enterprise instrument and that if no such application is made then the enterprise instrument terminates on 31 December 2013 by operation of Item 9 of Schedule 6 of the Transitional Act.

[3] On 22 May 2013 Senior Deputy President Acton issued a Statement, [2013] FWC 2790, outlining the approach adopted by the Fair Work Commission to deal with the matters raised by Item 10 of Schedule 6 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009. The three awards in these matters were included in the list of enterprise instruments identified by the Fair Work Commission. The applications appear to be in direct response to the Fair Work Commission’s actions under Schedule 6.

[4] A Full Bench of the Commission in Yum Restaurants P/L and the Shop, Distributive and Allied Employees’ Association, [2011] FWAFB 1077 (the Yum matter) said:

“[5] Division 2 of Schedule 6 of the Transitional Act deals with the Enterprise Instrument Modernisation Process. Item 4 deals with applications to replace an enterprise instrument with a modern enterprise award as Yum has done in this case. Sub-item 4(5) sets out matters to be taken into account in determining whether or not to make an enterprise award and the content of any such award. Item 5 deals with applications to terminate an enterprise instrument as the SDA has done in this case. Sub-item 5(4) sets out matters to be taken into account in determining the application. The matters in items 4(5) and 5(4) are identical. They are as follows:

“(a) the circumstances that led to the making of the enterprise instrument rather than an instrument of more general application;

(b) whether there is a modern award (other than the miscellaneous modern award) that would, but for the enterprise instrument, cover the persons who are covered by the instrument, or whether such a modern award is likely to be made in the Part 10A award modernisation process;

(c) the content, or likely content, of the modern award referred to in paragraph (b) (taking account of any variations of the modern award that are likely to be made in the Part 10A award modernisation process);

(d) the terms and conditions of employment applying in the industry in which the persons covered by the enterprise instrument operate, and the extent to which those terms and conditions are reflected in the instrument;

(e) the extent to which the enterprise instrument provides enterprise-specific terms and conditions of employment;

(f) the likely impact on the persons covered by the enterprise instrument, and the persons covered by the modern award referred to in paragraph (b), of a decision to make, or not make, the modern enterprise award, including any impact on the ongoing viability or competitiveness of any enterprise carried on by those persons;

(g) the views of the persons covered by the enterprise instrument;

(h) any other matter prescribed by the regulations.”

[5] In the Yum matter the Commission had before it two applications, one by Yum to modernise the enterprise instrument and the other by the SDA to terminate the enterprise instrument.

[6] The decision of the Full Bench in that matter was expressed as follows:

“[49] In all of the circumstances we do not believe that Yum has made out a case for the modernisation of the Pizza Hut Award. We dismiss the Yum application and grant the application by the SDA to terminate the Pizza Hut Award.”

[7] However the very structure of Division 2 of Schedule 6 of the Transitional Act meant that once the Full Bench decided not to grant the application by Yum to modernise the enterprise instrument the application by the SDA became redundant because Item 9(3) of Schedule 6 of the Transitional Act provided that an automatic consequence of a decision not to modernise an enterprise instrument was that the enterprise instrument “terminates when that decision comes into operation”.

[8] In each of the present matters there is only an application to terminate the enterprise instrument.

[9] In each of the present matters the employer party to the enterprise instrument does not object to the application to terminate the enterprise instrument.

[10] I turn to each of the criteria in Item 5 of Schedule 6 of the Transitional Act.

The circumstances that led to the making of the enterprise instrument rather than an instrument of more general application

[11] Each of the three enterprise instruments are superannuation awards. Both the A.P.D. Snack Foods Pty Limited (Superannuation) Award and The Uncle Tobys Company Pty Ltd Superannuation Award 1990 were made in 1987. The Kraft Foods Limited - National Union of Workers - Superannuation Award 1995 replaced an earlier award made in 1987. The three awards made in 1987 reflected a push at that time by unions to obtain superannuation benefits for employees and the only effective means of doing so was through the award system.

[12] By the early 1990’s Superannuation legislation had been introduced which provided superior superannuation benefits than that provided through the award system although the superannuation awards still had some residual benefit for some employees. The need for awards to create and protect employee superannuation entitlements passed once the raft of Superannuation legislation was introduced in the 1990’s.

Whether there is a modern award (other than the miscellaneous modern award) that would, but for the enterprise instrument, cover the persons who are covered by the instrument

[13] The Food, Beverage and Tobacco Manufacturing Award 2010is a modern award that would cover the employees who are covered by the enterprise instrument in each of these three matters. The modern award contains a superannuation provision in the following terms:

“29. Superannuation

29.1 Superannuation legislation

(a) Superannuation legislation, including the Superannuation Guarantee (Administration)Act 1992 (Cth), the Superannuation Guarantee Charge Act 1992 (Cth), the Superannuation Industry (Supervision) Act 1993 (Cth) and the Superannuation (Resolution of Complaints) Act 1993 (Cth), deals with the superannuation rights and obligations of employers and employees. Under superannuation legislation individual employees generally have the opportunity to choose their own superannuation fund. If an employee does not choose a superannuation fund, any superannuation fund nominated in the award covering the employee applies.

(b) The rights and obligations in these clauses supplement those in superannuation legislation.

29.2 Employer contributions

An employer must make such superannuation contributions to a superannuation fund for the benefit of an employee as will avoid the employer being required to pay the superannuation guarantee charge under superannuation legislation with respect to that employee.

29.3 Voluntary employee contributions

(a) Subject to the governing rules of the relevant superannuation fund, an employee may, in writing, authorise their employer to pay on behalf of the employee a specified amount from the post-taxation wages of the employee into the same superannuation fund as the employer makes the superannuation contributions provided for in clause 29.2.

(b) An employee may adjust the amount the employee has authorised their employer to pay from the wages of the employee from the first of the month following the giving of three months’ written notice to their employer.

(c) The employer must pay the amount authorised under clauses 29.3(a) or (b) no later than 28 days after the end of the month in which the deduction authorised under clauses 29.3(a) or (b) was made.

29.4 Superannuation fund

Unless, to comply with superannuation legislation, the employer is required to make the superannuation contributions provided for in clause 29.2 to another superannuation fund that is chosen by the employee, the employer must make the superannuation contributions provided for in clause 29.2 and pay the amount authorised under clauses 29.3(a) or (b) to one of the following superannuation funds or its successor:

(a) AustSafe Super; or

(b) AustralianSuper; or

(c) CareSuper; or

(d) HOSTPLUS; or

(e) LUCRF Super; or

(f) Statewide Superannuation Trust; or

(g) Sunsuper; or

(h) Tasplan; or

(i) Westscheme; or

(j) any superannuation fund to which the employer was making superannuation contributions for the benefit of its employees before 12 September 2008, provided the superannuation fund is an eligible choice fund.

29.5 Absence from work

Subject to the governing rules of the relevant superannuation fund, the employer must also make the superannuation contributions provided for in clause 29.2 and pay the amount authorised under clauses 29.3(a) or (b):

(a) Paid leave

While the employee is on any paid leave.

(b) Work related injury or illness

For the period of absence from work (subject to a maximum of 52 weeks in total) of the employee due to work related injury or work related illness provided that:

(i) the employee is receiving workers compensation payments or is receiving regular payments directly from the employer in accordance with statutory requirements; and

(ii) the employee remains employed by the employer.”

The content of the modern award; the terms and conditions of employment applying in the industry in which the persons covered by the enterprise instrument operate, and the extent to which those terms and conditions are reflected in the instrument; and the extent to which the enterprise instrument provides enterprise-specific terms and conditions of employment.

[14] It is clear that the modern award in conjunction with the relevant superannuation legislation set the minimum standards for superannuation in the industry in which the persons covered by the enterprise instrument operate. Further it is clear that the modern award in conjunction with the relevant superannuation legislation provides for the same matters, and more, than is provided for in the enterprise instruments. There is nothing in the enterprise instrument which is an enterprise specific term when considered in light of the general superannuation entitlements arising under the legislation together with the additional matters provided for in the modern award.

The likely impact on the persons covered by the enterprise instrument, and the persons covered by the modern award of a decision to terminate, or not terminate, the modern enterprise instrument, including any impact on the ongoing viability or competitiveness of any enterprise carried on by those persons.

[15] The likely impact on any of the persons covered by the enterprise instrument if the enterprise instrument is terminated is negligible if there is any impact at all. The termination of the enterprise instrument will have no impact on the viability or competitiveness of the enterprise. This must be so given that the combined operation of the relevant superannuation legislation and the modern award already provide a safety net for superannuation which is better than that provided by the enterprise instrument.

The views of the persons covered by the enterprise instrument.

[16] I have sought the views of the employers and employee organisations party to these enterprise instruments and I consider the views expressed by the employee organisations also reflect the views of employees (if there are any) covered by these enterprise instruments.

Conclusion and Decision

[17] Having considered each of the criteria set out in Item 5 of Schedule 6 of the Transitional Act I am satisfied that each of the enterprise instruments should be terminated as from the date of this decision.

An Available Alternative Path to Termination

[18] As I have already decided the applications in these matters the following observations do not form part of my decision.

[19] Item 5 of Schedule 6 of the Transitional Act is not the only means of terminating some enterprise instruments before 31 December 2013.

[20] Where an enterprise instrument is an award made which operated under the former Workplace Relations Act then the award may be terminated on the grounds that the award is obsolete or no longer capable of operating.

[21] With the introduction of the Fair Work Act legislation was also introduced which dealt with a range of transitional matters including providing for the continued operation of awards which were in operation under the former Workplace Relations Act 1996 (WR Act).

[22] Schedule 3 of the Transitional Act provided generally for the continued existence and operation of awards which were in operation under the WR Act. Part 3 of Schedule 3 specifically provided for the variation and termination of awards which continued to operate. Items 12 and 12A of Part 3 of Schedule 3 of the Transitional Act provide as follows:

“12 Awards: continued application of WR Act provisions about variation and revocation

(1) Subject to this item, Divisions 5 (other than subsections 554(1) to (4)) and 6 of Part 10 of the WR Act continue to apply on and after the WR Act repeal day in relation to transitional instruments that are awards as if references to the Commission were instead references to FWA.

Note: Items 10 and 11 apply instead of subsections 554(1) to (4) of the WR Act.

(2) FWA must perform its powers and functions under Divisions 5 and 6 in a way that furthers the objects of Part 10 of the WR Act.

(3) An award cannot be varied or revoked under Division 5 or 6 after the end of the bridging period, except as follows:

(a) an award can be varied after the end of the bridging period under section 553 of the WR Act;

(b) an award can be varied or revoked after the end of the bridging period as a result of FWA continuing to deal with a matter that it was dealing with before the end of the bridging period.

12A State reference transitional awards: variation and revocation

General provisions

(1) Subject to this item, Divisions 5 (other than subsections 554(1) to (4)) and 6 of Part 10 of the WR Act apply on and after the WR Act repeal day in relation to transitional instruments that are State reference transitional awards as if:

(a) references to the Commission were instead references to FWA; and

(b) references to an award included references to a State reference transitional award.

Note 1: Items 10 and 11 apply instead of subsections 554(1) to (4) of the WR Act.

Note 2: For variation of State reference common rules, see the provisions continued in effect by item 8A.

(2) To avoid doubt, for the purpose of sections 552 and 553 of the WR Act, as applied by subitem (1) in relation to State reference transitional awards, “minimum safety net entitlements” includes minimum safety net entitlements relating to wages.

Note: For variation of terms relating to wages after the end of the bridging period, see subitems (4) to (6).

(3) FWA must perform its powers and functions under Divisions 5 and 6 in a way that furthers the objects of Part 10 of the WR Act.

Special provisions about variation or revocation after the end of the bridging period

(4) A State reference transitional award cannot be varied or revoked after the end of the bridging period except as follows:

(a) a State reference transitional award, other than terms relating to wages, can be varied after the end of the bridging period under section 553 of the WR Act;

(b) terms of a State reference transitional award relating to wages can be varied after the end of the bridging period in an annual wage review under the FW Act as provided for in subitem (5);

(c) a State reference transitional award can be varied after the end of the bridging period as a result of FWA continuing to deal with a matter that it was dealing with before the end of the bridging period.

(5) In an annual wage review, FWA may make a determination varying terms of a State reference transitional award relating to wages.

(6) For the purpose of subitem (5), Division 3 of Part 2-6 of the FW Act (other than section 292) applies to terms of a State reference transitional award relating to wages in the same way as it applies to a modern award.”

[23] The effect of each of Items 12(1) and 12A(1) is that s.556 (which is in Division 5 of Part 10) of the former WR Act continues to apply to the awards continued in operation under Schedule 3 of the Transitional Act 2009.

Section 556 of the WR Act provides as follows:

“556 Revocation of awards—award obsolete or no longer capable of operating

(1A) The Commission must not make an order revoking an award except in accordance with this section.

(1) An employer, employee or organisation bound by an award may apply to the Commission to have the award revoked on the ground that the award is obsolete or is no longer capable of operating.

(2) If an application is made under subsection (1), the Commission must take such steps as it thinks appropriate to ensure that each employer, employee and organisation bound by the award is made aware of the application.

(3) The Commission must make an order revoking the award if it is satisfied that:

(a) the award is obsolete or is no longer capable of operating; and

(b) revocation of the award would not be contrary to the public interest.”

[24] Whilst the former Australian Industrial Relations Commission and the former Conciliation and Arbitration Commission had a general power to set aside awards this changed with the introduction of the Work Choices amendments to the WR Act. The general power to set aside an award which had been contained in s.111 of the Act was removed and replaced with specific powers contained in both s.555 and s.556. Relevantly for consideration in the context of the current matters is that s.556 still has effect and can be enlivened by an application made under that section.

[25] The test for setting aside an award under s.556 of the WR Act is quite different from and simpler than the test under Item 5 of Schedule 6 of the Transitional Act. Also whereas the Commission’s power to set aside an award under Item 5 of Schedule 6 of the Transitional Act is discretionary the Commission has no discretion under s.556(3) of the WR Act. Under s.556 of the WR Act the Commission must revoke the award if the Commission is satisfied that the award is obsolete or no longer capable of operating and that the revocation of the award would not be contrary to the public interest.

[26] Item 5 of Schedule 6 and Item 12 of Schedule 3 of the Transitional Act both operate in relation to enterprise instruments that are awards and each can be used to have an enterprise instrument that is an award terminated. Whilst Item 5 of Schedule 6 refers to termination of an enterprise instrument and Item 12 of Schedule 3 refers to revocation of an award, the result is the same.

[27] It appears to me that each of the three applications in the matters before me could also have been dealt with under s.556 of the WR Act more easily than under Item 5 of Schedule 6 of the Transitional Act and with the same end result.

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