Nowshire Pty Ltd

[2010] FWA 2663

[2010] FWA 2663

FAIR WORK AUSTRALIA

DECISION

Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
Sch. 3, Item 15 - Collective agreement-based transitional instruments: termination by agreement.

Nowshire Pty Ltd
(AG2009/22481)

Agricultural industry
COMMISSIONER ASBURY	BRISBANE, 6 APRIL 2010

Application to terminate collective agreement-based transitional instrument.

Background

[1] This is an application under Subdivision C of Division 7 of Part 2-4 of the Fair Work Act 2009 (the Act) as it applies under item 15 of Schedule 3 of the Fair Work (Transitional Provisions and Consequential Amendments) Act (the Transitional Act) for termination of a collective agreement based transitional instrument. The applicant is Nowshire Pty Ltd (Nowshire). The transitional instrument subject of the application is the Stanbroke Pastoral Company Pty Ltd Certified Agreement 2001 (the Agreement). The application was made on 23 December 2009.

[2] The Agreement subject of these proceedings was made under Division 2 s.170LK of the Workplace Relations Act 1996 (the WR Act) and was certified on 12 December 2001. The Agreement came into force from the beginning of the first pay period commencing on or after 1 January 2002 and remained in force for three years from that date. The parties to the Agreement are the Stanbroke Pastoral Company Pty Ltd (Stanbroke) and its employees.

[3] On 25 January 2010, the matter was mentioned for the purpose of giving the applicant an opportunity to make submissions in relation to the following issues:

• Whether Nowshire is a party to the Agreement that is sought to be terminated; and



• Whether the requirements for termination of the Agreement had been met.

Submissions and supporting material

[4] On 12 February 2010 an affidavit of Mr Terence Hickey, Human Resource Manager for the Stanbroke Group, was filed in support of the application. Relevantly the affidavit states that:

• On 1 January 2005, Stanbroke “transferred the human resources aspect of its business” to Nowshire, and the latter company has carried on the business of providing human resource management services to Stanbroke for a fee;



• Nowshire has operated the business of providing human resources to Stanbroke on the basis that it is bound by the Agreement as a successor to part of Stanbroke’s business;



• Since 1 January 2005 Stanbroke has not employed any employees who would fall within the coverage of the Agreement.

[5] In relation to obtaining the agreement of employees to the termination of the Agreement, Mr Hickey states that on 8 December 2009 Nowshire provided employees with a letter requesting them to approve the proposed termination of the Agreement by voting. The letter advised employees that they were invited to consider whether they wanted to approve the termination of the Agreement and its replacement with the Modern Pastoral Award with effect from 1 January 2010 or when FWA approved the termination of the Agreement, whichever was later. Employees were also advised that if they did not approve the termination of the Agreement, it would remain as their primary industrial instrument, and were provided with copies of the Agreement and the Pastoral Award 2010 for the purposes of conducting a comparison.

[6] Mr Hickey states that 38 employees were eligible to vote and of 36 ballots cast, 35 were in favour of terminating the Agreement. Mr Hickey further states that if the Agreement was terminated, Nowshire would be bound by the terms of the Pastoral Award 2010 and this would result in slight pay increases to relevant employees. Nowshire has paid its employees as if they were covered by the Award, in anticipation of the termination of the Agreement.

[7] Thynne and Macartney Solicitors on behalf of Nowshire also corresponded with FWA and advised that Nowshire is the only employer currently covered by the Agreement, and Stanbroke has instructed that it would also agree to the termination of the Agreement. Thynne and Macartney submitted that the termination should be effective from midnight on 31 December 2009 as this would be administratively simpler and reflect the views of employees as indicated by the results of the ballot. Further, it was submitted that Nowshire has been paying employees the rates under the Pastoral Award 2010 in anticipation that the Agreement would be terminated from that date.

Legislation

[8] Item 15 of Schedule 3 of the Transitional Act provides that Subdivision C of Division 7 of Part 2-4 of the Act applies in relation to a collective agreement-based transitional instrument as if a reference to an enterprise agreement included a reference to a collective agreement-based transitional instrument. Subdivision C of Division 7 of Part 2-4 of the Act deals with termination of agreements by employers and employees. Section 219(1) provides that where an agreement covers a single employer, the employer and the employees may jointly agree to terminate it. By virtue of s.219(2) the termination has no effect unless it is approved by Fair Work Australia (FWA) under s.223. Procedural matters are set out in sections 220 to 222. Essentially, the relevant procedural requirements are as follows:

• An employer covered by an agreement may request employees to approve a proposed termination of the agreement by voting for it – s.220(1);



• The employer must take all reasonable steps to notify employees of the time and place of the vote and the voting method, and must give the employees a reasonable opportunity to decide whether they want to approve the proposed termination – s.220(2);



• The termination of a single-enterprise agreement is agreed to when a majority of employees who cast a valid vote approve the termination – s.221(1) ;



• If a termination of an enterprise agreement has been agreed to, a person covered by the agreement must apply to FWA to terminate the Agreement – s.222(1); and



• The application must be made within fourteen days after the termination is agreed to, or within a further date, if FWA considers it fair to extend that period – s.222(3).

[9] Section 223 provides that where an application is made under s.222 of the Act, FWA must approve the termination of an enterprise agreement if FWA is satisfied that the employer gave employees a reasonable opportunity to decide whether they wanted to approve the proposed termination; the termination was agreed to as required by s.221(1); there are no other reasonable grounds for FWA to believe that the employees have not agreed to the termination; and it is appropriate to approve the termination taking into account the views of any employee organisation covered by the agreement.

Conclusions

[10] After considering the submissions and material in support of the application, I have reached the following conclusions. Upon reaching its nominal expiry date, the Agreement remained in effect by virtue of s.170LX of the Workplace Relations Act 1996 (the WR Act). Thereafter, the Agreement remained in effect as none of the actions by which it could have been terminated were taken. I take it that the transfer of the “human resource aspect” of Stanbroke to Nowshire, which is said to have occurred on 1 January 2005, constituted a succession, transmission or assignment of the business of Stanbroke to Nowshire. Accordingly, by virtue of s.170MB of the WR Act, Nowshire was bound by the Agreement on transmission of the business or part of the business, and continues to be bound by the Agreement.

[11] The Agreement covers a single employer, Nowshire. As required by s.219 of the Act, Nowshire and its employees have jointly agreed to terminate the Agreement. Nowshire requested the approval of its employees to approve the termination of the Agreement by voting for it. The affidavit of Mr Hickey states the steps that were taken by Nowshire to notify employees of the time and place at which the vote would occur, and to notify them of the voting method to be used. I am satisfied that the provisions of s.220(2)(a)(i) and (ii) have been met.

[12] In relation to s.220(2)(b), I note that the information provided by Nowshire to employees about the effect of a decision to terminate the Agreement was technically correct, in that if the Agreement remained in effect it would continue to be the “primary industrial instrument” applying to employees. I also note that employees were not informed about the effect of s.206 of the Act and s.28 of the Transitional Act. The effect of those provisions is that if employees of Nowshire did not approve the termination of the Agreement, it would remain in operation, but the higher rates under Pastoral Award 2010 would apply from 1 January 2010, notwithstanding the rates in the Agreement.

[13] It is irrelevant to the question of whether the Agreement should be terminated, that Nowshire has commenced paying employees the wage rates under the Pastoral Award 2010 in anticipation that the termination would be approved by FWA. Regardless of whether or not the termination of the Agreement is approved by FWA, Nowshire was obligated to pay employees the higher of the base rate of pay under the Pastoral Award 2010 and the base rate under the Agreement. Mr Hickey states in his affidavit that the rates under the Pastoral Award 2010 are higher than those under the Agreement. There is no comparative material about other provisions of the Agreement and the Award, so that the effect on the termination can be assessed.

[14] However, the effect of the termination of the Agreement is not a consideration that is required of FWA under Part 2-4 Chapter 7 Subdivision C of the Act. An application under Subdivision C can be made whether the agreement has passed its nominal expiry date or not. The essential element of Subdivision C is that the employer and the employees covered by the Agreement have jointly agreed to terminate it, and that employees were given a reasonable opportunity to decide whether or not they wanted to approve the proposed termination. The effect of the termination of an agreement comes into play when an application to terminate an Agreement is made under Subdivision D. The provisions in Subdivision D apply to applications made by one or more parties to an agreement rather than all parties to the Agreement. It is an alternative provision and where the employer and employee parties to an enterprise agreement agree to terminate it there is no requirement that the application is made under Subdivision D simply because the nominal expiry date of the agreement has passed. The essence of Subdivision D is that one or more of the parties to an agreement have not agreed to terminate it, and the views of those parties, and the effect of the termination are therefore relevant to any decision of FWA in relation to termination.

[15] In all of the circumstances of this case, the advice provided to the employees was technically correct. According to the affidavit of Mr Hickey, the employees were given a copy of the Agreement and the Pastoral Award 2010, before being asked to approve the termination of the Agreement. Further, Mr Hickey states that of 38 employees eligible to vote, 36 ballots were cast and 35 employees agreed to the termination of the Agreement. Accordingly I am satisfied that Nowshire complied with the requirements of s.220(2) of the Act by giving employees a reasonable opportunity to decide whether to approve the termination of the Agreement. I am also satisfied that the termination was agreed to in accordance with s.221(1) of the Act, which applied because the Agreement was a single enterprise agreement. On the basis of the affidavit of Mr Hickey, and the submissions and correspondence from Thynne and Macartney Solicitors, there are no other reasonable grounds for believing that the employees have not agreed to the termination. There are no employee organisations covered by the Agreement.

[16] The application was filed on 23 December 2009. In the circumstances, I approve the termination of the Agreement operative from 1 January 2010. I order accordingly.

COMMISSIONER

Appearances:

Mr M. Fisher Solicitor, on behalf of Nowshire Pty Ltd.

Hearing details:

2010.

Brisbane:

January 25.

Printed by authority of the Commonwealth Government Printer

<Price code C, AG812603  PR995722>