NQR Pty Ltd T/A NQR Grocery Clearance Stores

[2017] FWCA 2746

[2017] FWCA 2746

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.225—Enterprise agreement

NQR Pty Ltd T/A NQR Grocery Clearance Stores
(AG2017/1174)

NQR PTY LTD AND NATIONAL UNION OF WORKERS WAREHOUSE ENTERPRISE AGREEMENT 2015

Storage services
COMMISSIONER ROE	MELBOURNE, 18 MAY 2017

Application for termination of the NQR Pty Ltd and National Union of Workers Warehouse Enterprise Agreement 2015.

[1] The application to terminate the NQR Pty Ltd and National Union of Workers Warehouse Enterprise Agreement 2015 (the Agreement) has been made by NQR Pty Ltd T/A NQR Grocery Clearance Stores (NQR), the employer covered by the Agreement under s.225 of the Fair Work Act 2009 (the Act). The nominal expiry date of the Agreement was 30 June 2016.

[2] I am satisfied that NQR is able to make the application and that the pre-requisites for the application as set out in s.225 of the Act are met.

[3] The application was initially opposed by the National Union of Workers (NUW). The NUW was a bargaining representative for the Agreement and is noted as covered by the Agreement. The NUW subsequently withdrew its opposition.

[4] If the Agreement is terminated the Storage Services and Wholesale Award 2010 (the Award) will apply to the employer and the employees.

[5] The Agreement covers warehouse workers. There are 14 workers at the warehouse covered by the Agreement.

[6] In the second half of 2016 a replacement agreement was negotiated and made. An application was submitted to the Fair Work Commission for approval of the new agreement on 21 November 2016 (AG2016/7199). However, the Notice of Employee Representational Rights was found to be invalid and as a consequence the application was withdrawn on 23 November 2016. A further application was made on 21 December 2016 (AG2016/7929). There was some delay before the Fair Work Commission (FWC) assessed the application but on 28 February 2017 the FWC Member Support Research Team wrote to NQR outlining a number of concerns and requesting a response. On 3 March 2017 NQR responded by discontinuing the application.

[7] The withdrawal of the application seems surprising. The correspondence from the Member Support Research Team raised a number of matters which were minor and which could have been resolved without any significant cost to the company. These included:

• Signature page update;



• Clarification of how the NERR was distributed ;



• Model Consultation Term;



• Clarification of annual leave pay on termination;



• Clarification that compassionate leave is available for each occasion; and



• Clarification concerning community service unpaid leave.

[8] The correspondence from the Member Support Research Team then raised some concerns about the answer in the Form F17 Statutory Declaration that there were no detrimental terms. The correspondence pointed out that the rates in the proposed agreement were about 1.34% above the Award rates and there were a number of possibly detrimental terms.

[9] I am satisfied that the two most substantial matters raised are not in fact a concern. The ordinary hours are defined in such a manner as to exclude shift work and as a consequence shift work penalties are not relevant. Overtime rates apply for work outside the span of hours. It is also sufficiently clear that part-time employees receive overtime rates for work outside of their agreed hours. The other concerns raised are relatively minor in their impact and must be balanced against a number of more beneficial terms. In summary, the proposed agreement could have been approved with the provision of information and undertakings which would not have required significant increase in costs to the employer.

[10] Following the withdrawal of the replacement agreement which had been unanimously supported by the 13 employees who would have been covered by it, the NUW and NQR engaged in further negotiations. However, agreement was not reached and NQR decided to make an application to terminate the Agreement and has indicated in the application to terminate the Agreement that it no longer wishes to finalise a replacement collective agreement.

[11] I am required to consider the following matters:

“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.”

[12] I approved the Agreement on 19 August 2015 ([2015] FWCA 5270). I remain satisfied that the Agreement provides terms and conditions which ensure that each employee is better off overall than they would have been under the Award. The Agreement provides for the rates of pay to be adjusted to ensure that they do not fall below the Award rates. The Agreement contains a number of significant matters which are better than the Award including:

• A disputes settlement procedure which allows for arbitration at the initiative of either party;



• A disciplinary procedure which requires detailed fair treatment including requiring three warnings prior to dismissal in most circumstances;



• Payment of a vehicle allowance of 74 cents per km;



• 2 paid family friendly days off per year for full time employees;



• A commitment to permanent employment and provision for casual conversion after 12 months;



• Significantly enhanced redundancy payment;



• Six weeks notice of redundancy;



• 6 paid days off for job search during redundancy notice period;



• Rights to paid union meetings, union representation, deduction of union fees, and delegates time off;



• Access to trade union training leave of up to six days in each two year period; and



• Restriction on the use of labour hire and requirements for notification if there is an intention to use labour hire workers.

[13] The Agreement contains some conditions which are detrimental when compared to the Award:

• 3 hour as opposed to 4 hour minimum engagement for casuals;



• Meal allowance payable after 2 hours rather than 1 hour of overtime;



• Overtime is double time after 3 hours rather than 2 hours; and



• Absence of a requirement for compensation for damaged clothing.

[14] There are some allowances which are not included in the Agreement but which are applicable under the Award. However, it is not clear to what extent the employment conditions would mean that the entitlement to the allowance would arise. This relates to first aid and cold temperature allowances.

[15] I received five written submissions from employees all of whom strongly oppose the termination of the Agreement. They particularly refer to concerns about job security from the removal of the restrictions on casual and labour hire employment, security of redundancy entitlements and the desire to remain on the current Agreement until a new one can be negotiated.

[16] NQR argue that the fact that the Agreement has passed its nominal expiry date is a reason in favour of terminating the Agreement. An application under section 225 of the Act can only be made if the nominal expiry date has passed. This is therefore a pre-requisite for the application to be made and cannot be seen as a factor in favour of termination of an agreement. There is no presumption that agreements which have passed their nominal expiry date should be terminated. The Act specifically provides that agreements may remain in force until a replacement agreement has been negotiated.

[17] NQR argue that negotiations for a new agreement reached an impasse. Given the relatively short time frame since the last application for approval of a new agreement and the relatively narrow scope of the outstanding issues referred to by the company, I am not satisfied that the evidence before me is sufficient for me to conclude that a true impasse was reached.

[18] NQR has offered to provide existing Employees with an employment contract which will provide for no reduction in their base rate of pay and will provide for the existing family friendly days, vehicle allowance, and the superior redundancy entitlements. This is of course a significant and relevant consideration. However, this must be balanced against:

• The absence of any commitment to maintain the other significant benefits of the Agreement including access to the disputes procedure with FWC arbitration, the fair disciplinary procedure, the rights to access the union, the rights to trade union training leave, the rights to union meetings and the commitments to permanent employment and casual conversion and restricted use of labour hire.



• The fact that protection in an employment contract is inferior to protection in a collective agreement. Enforcement and dispute settlement in respect to a collective agreement is much quicker, cheaper and more accessible than enforcement and disputes settlement in respect to an employment contract. This is particularly the case where the Agreement disputes settlement procedure provides for arbitration at the request of one party. As the Award does not contain such a disputes settlement procedure this relates to all conditions in the Agreement and not just the superior non-preserved matters.



• If the employer engages new employees on lesser conditions of employment which exclude the matters “protected” by the employment contracts for existing employees then this, over time, may make the engagement of the existing employees less attractive to the employer and may also increase the pressure to remove the more beneficial conditions. NQR has made no commitment to retain the conditions for new employees.

[19] NQR argue that the termination of the Agreement will mean that it does not have to incur the costs associated with Clause 12 of the Agreement. Clause 12 is the clause which provides for union meetings, union access and trade union training. NQR submits that Clause 12.1 which provides for right of entry for the purpose of inductions and the disputes procedure of the Agreement and which is said to be separate from the right of entry under the Act is an unlawful term. I am satisfied that this is not the case and that the provision is commonplace and consistent with Full Bench and Federal Court authority. I am not satisfied that the costs of these provisions are a significant reason in favour of termination of the Agreement. The provisions are not unusual or particularly onerous. Prior notice is required for right of entry and it is only for narrowly defined purposes. The requirement in respect to time and wages records mirrors obligations under the Act. The union recognition provision is arguably no more than a statement of rights under the Act. The right to inductions of new employees of no more than 15 minutes duration is neither a major disruption or a major cost. Trade union training is limited to six days in each two year period and there must be proper evidence of attendance and proper application and notice. The union fee deduction provisions are not onerous. Union meetings are only to be two hours per year and this is not a major disruption or cost.

[20] NQR argue that the disciplinary procedure prevents it from undertaking reasonable management action. The clause is neither unusual nor particularly onerous. It allows for the process to be bypassed in respect to serious misconduct and for steps to be jumped in the case of misconduct of a serious nature but which does not meet the definition of serious misconduct. Generally the clause does no more than require procedural fairness and natural justice.

Public Interest Consideration

[21] 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.

[22] In the circumstances of this case the consequences of the termination of the Agreement will be that NQR is able to bargain for a replacement agreement without the beneficial terms being the status quo. Given that the other conditions largely mirror the Award, this will shift the bargaining power in favour of the employer. Whilst the beneficial terms remain in the Agreement the employees and their representatives can resist change in these conditions knowing that those conditions will remain in place until and unless agreement is reached. If the beneficial terms are no longer in force in an industrial instrument the employer can more easily demand that the conditions not be included in any agreement or that there be some concession in return for their restoration.

[23] In the circumstances of this case and given the small size of the workforce covered by the Agreement and the fact that the Agreement overall does not contain particularly generous or onerous conditions, I doubt that termination or otherwise of this Agreement will impact on the broader public interest as it relates to matters such as employment, or inflation. The Agreement was approved by the FWC and therefore it can be inferred that it results in employees being better off overall and prima facie its termination will not improve industrial standards.

[24] For the reasons discussed earlier I am not satisfied that the over award conditions contained in the Agreement are so onerous or significant that they could impact on employment or business viability. There was certainly inadequate evidence provided by NQR to establish that case.

[25] There has only been a relatively short period of bargaining since the last application for approval of a replacement agreement was unilaterally withdrawn by NQR. There is no evidence before me of unreasonable conduct on the part of employees and the NUW in the bargaining process. The only evidence before me suggests that the matters which have been in contest in bargaining are of relatively narrow compass. This is likely to be the case given that the wages and conditions are generally close to the Award. There is no evidence before me that the Agreement terms and conditions are a significant impediment to productivity, the viability of the company or security of employment. I consider that the impact that termination is likely to have on the bargaining power of the parties to be the most significant factor which goes to the public interest in the circumstances of this case. Termination of an agreement at this time and in the circumstances of this case is likely to alter the balance of power between the bargaining parties and is not likely to promote productivity, employment or the settlement of disputes.

[26] On balance I am satisfied that it is contrary to the public interest to terminate the Agreement.

Appropriateness Consideration

[27] For completeness I will refer further to issue of appropriateness. I have already observed that a number of employees have opposed the termination of the Agreement. I consider the concerns expressed by those employees to have a sound basis for the reasons discussed earlier. Termination of the Agreement will have an adverse impact on the rights and conditions of the employees and the enforceability of their remaining rights and conditions of employment. This is mitigated to some extent by the proposed employment contracts for existing employees. There is no probative evidence before me about the views of the other employees. In the circumstances of this case it cannot be inferred that they support the termination of the Agreement. For the reasons discussed earlier the termination of the Agreement is likely to shift the balance of power in bargaining significantly in favour of the employer.

[28] The NUW has withdrawn their opposition to the termination of the Agreement.

[29] The employer supports the termination of the Agreement. However, for the reasons discussed earlier the reasons for termination advanced by the employer are not strong. The evidence does not establish that productivity will be positively affected by the termination. The evidence does not establish that the viability of the business or security of employment will be significantly affected by the termination. The evidence does not establish that the termination will make the conclusion of the bargaining more likely. The position of the employer at this stage is that they do not wish to conclude the bargaining by the making of an agreement.

[30] All of the circumstances must be considered. There are some considerations which weigh in favour of termination and some which weigh against. Balancing those considerations I am satisfied that the considerations weigh against termination being appropriate. In the event that I am wrong about the public interest consideration I would find that, having regard to the appropriateness considerations in Section 226(b), termination of the Agreement is not appropriate in all the circumstances.

Conclusion

[31] The requirements of Section 226 are not met and as a consequence the application for termination of the Agreement must be dismissed.

COMMISSIONER

Appearances:

T Ramsay for the Applicant

Hearing details:

2017

Melbourne:

16 May.

Final written submissions:

12 May 2017

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<Price code A, AE415340  PR593046 >